Committee Reports > List of Committees > Dáil > 1998 > Committee of Public Accounts > Report - Timely Laying of Reports and Accounts

DÁIL ÉIREANN

COMMITTEE OF PUBLIC ACCOUNTS

REPORT ON THE TIMELY LAYING OF REPORTS, ACCOUNTS AND FINANCIAL STATEMENTS OF SUBSIDIARY BODIES

May, 1998

CONTENTS

1. INTRODUCTION

The Committee, at its meeting of 4 December 1997, decided that the accounts/financial statements of the Higher Education Authority and University College Cork should be examined at its meeting of 26 March 1998.

As the statements had not been laid before each House, a statutory requirement, under Standing Order 149, that enabled the Committee to carry out its examination, the Department of Education and Science was contacted by the Committee Secretariat.

On the 20 March 1998, the following were laid before each House:-

At the meeting of the 26 March 1998, the Department officials were asked by the Committee Chairman to explain how such a delay in laying these documents before each House had arisen. He was informed that there had been a problem with staff turnover in the years in question and that the laying of reports had been overlooked.

As a result of this meeting it was discovered that the Higher Education Authority and U.C.C. accounts were not the only accounts relating to educational institutions that had not been laid in a timely manner. A list of all accounts of such institutions laid before the Dáil subsequent to the Committee meeting of the 26 March 1998 is included in Appendix B. A disturbing element of this is whether or not this backlog of accounts to be laid before the Houses would have been discovered if the Committee had not examined the accounts of the Higher Education Authority and U.C.C.

The Committee decided that the Accounting Officer of the Department of Education and Science should be called before the Committee to explain the situation. The Secretary General of the Department of Education and Science appeared before the Committee on the 7 April 1998. The Secretary General, who had been recently appointed, assured the Committee that since he had become Accounting Officer, new and stringent procedures had been put in place and that arrangements had been made for a meeting of all senior officials to ensure the importance of compliance with the procedures being drawn up is impressed on all staff and that absolute priority is given to the laying of accounts and reports. He also intends to further strengthen staff training in this area at all levels throughout the Department.

On the discovery of this lapse the Committee decided to write to all Accounting Officers requesting that where there was a statutory obligation to lay audited reports/accounts/financial statements before the Houses of the Oireachtas, they should do so within three months of their receipt. They should also indicate what reports, in their possession, have not yet been laid. It was further decided, at the meeting of the 7 April 1998, that the Committee report to the Dáil on the subject with a recommendation concerning timely laying of such reports/accounts/financial statements of subsidiary bodies before the Houses of the Oireachtas.

2. RECOMMENDATIONS

The Comptroller and Auditor General (Amendment) Act, 1993 states that:

‘Upon the completion of the audit of accounts of a person or fund whose accounts are audited by him under section 5 (1) (including the accounts referred to in section 5 (1) (a) (iv)), the Comptroller and Auditor General shall draw up a report in writing in relation to the accounts and shall submit a copy of the accounts together with his report thereon, in case the accounts are those of a fund, to the Minister of the Government, the Department or the person by or for whom or by or for which the fund is owned, operated, or controlled or held in trust, and a person (other than a Minister of Government) to whom the documents aforesaid are so submitted shall as soon as may be submit copies thereof -

(a)to the relevant Minister, and

(b)to any other person to whom, immediately before the passing of this Act, the report, or a copy thereof, of the auditors of the person or fund was required by or under any enactment to be submitted’

- Section 11, Subsection 1.

The Act further states that:

‘The Minister of Government to whom a copy of a report of the Comptroller and Auditor General and a copy of the accounts to which the report relates are submitted under subsection (1) shall, as soon as may be, cause a copy of the report and a copy of the accounts so submitted to be laid before each House of the Oireachtas.’

- Section 11, Subsection 3 (a).

The Committee is of the opinion that ‘as soon as may be’ does not impress a sufficient sense of urgency on the laying of reports and accounts before the Houses. If there is to be true accountability, accounts must be kept up to date and available to the Committee for examination. As the Committee’s Orders of Reference require that reports and accounts be laid before the Houses before it proceeds with its examination of same, their laying before the Houses must be seen as an integral part of the accounting process in respect of the bodies concerned. Delay in this laying process leads to a situation where the Committee may examine accounts which are so out of date as to make the Committee’s deliberations irrelevant. Such a situation undermines the principle of accountability.

The Committee recommends that the Ministers involved ensure that procedures are in place in their Departments/Offices to ensure that all such reports/accounts/financial statements are laid before each House within three months of receipt by them of same.

ACCOUNTS EXAMINED:

The following Accounts were examined by the Committee and the Minutes of Evidence are published herewith:

_________________

JIM MITCHELL T.D.

Chairman

14 May 1998

3. IMEACHTAÍ

DÉARDAOIN 26 MÁRTA 1998

THURSDAY 26 MARCH 1998

1.Chruinnigh an Coiste ar 9.30 a.m.

2.Comhaltaí i Láthair:-

Na Teachtaí S. Mistéal, (i gCeannas), Ardachaidh, de Bheil, Cooper-Ní Fhloinn, Ó Duinneacha, Ó Dochartaigh, Mac Dhurcáin, Ó Foghlú Ó Luineacháin, Mac Cormaic, Ó Coinín.

3.Chuaigh an Coiste i suí príobháideach.

Rinne an Coiste breithniú.

Chuaigh an Coiste i suí poiblí.

4.Breithniú ar Ráitis Airgeadais 1995 agus 1996.

Rinne an Coiste breithniú agus críochnaíodh breithniú ar na Ráitis Airgeadais ó:-

An tÚdarás um Ard-Oideachas. Coláiste na hOllscoile, Corcaigh.

5.Finnéithe a Ceistíodh:-

S. Ó hEideáin (Rúnaí/Príomhfheidhmeannach, An tÚdarás um Ard-Oideachas), Dr. M. Moirtéil (Uachtarán, Coláiste na hOllscoile, Corcaigh), S. Puirséal, (An tArd- Reachtaire Cuntas agus Ciste).

6.Athlá.

Chuaigh an Coiste ar athló ar 1.50 p.m. go dtí 11.00 a.m. Déardaoin 2 Aibreán 1998.

1.The Committee met at 9.30 a.m.

2.Members Present:-

Deputies J. Mitchell (in the Chair), Ardagh, Bell, Cooper-Flynn, Dennehy, Doherty, Durkan, Foley, Lenihan, McCormack, Rabbitte.

3.The Committee went into private session.

The Committee deliberated.

The Committee went into public session.

4.Consideration of Financial Statements 1995 and 1996.

The Committee deliberated and concluded consideration of the Financial Statements:-

Higher Education Authority University College Cork.

5.Witnesses Examined:-

Mr. J. Hayden (Secretary/Chief Executive, Higher Education Authority), Dr. M. Mortell (President, U.C.C.), Mr. J Purcell (Comptroller and Auditor General).

6.Adjournment.

The Committee adjourned at 1.50 p.m. until 11.00 a.m. on Thursday 2 April 1998.

DÉ MÁIRT 7 AIBREÁN 1998

TUESDAY 7 APRIL 1998

1.Chruinnigh an Coiste ar 2.40 p.m.

2.Comhaltaí i Láthair:-

Na Teachtaí S. Mistéal, (i gCeannas), Ardachaidh, de Bheil, Ó Duinneacha, Ó Dochartaigh, Mac Dhurcáin, Ó Foghlú, Mac Giolla Dé, Mac Cormaic, Ó Coinín.

3.Chuaigh an Coiste i suí príobháideach.

Rinne an Coiste breithniú.

Chuaigh an Coiste i suí poiblí.

4.Plé ar na Tuarascálacha Bliantúla agus na Ráitis Airgeadais i ndáil le hEarnáil an Oideachais.

5.Finnéithe a Ceistíodh:-

S. Ó Duinneacha (Ard-Rúnaí, An Roinn Oideachais agus Eolaíochta)

S. Puirséal, (An tArd-Reachtaire Cuntas agus Ciste).

6.Athlá.

Chuaigh an Coiste ar athló ar 4.44 p.m. go dtí 11.00 a.m. Déardaoin 23 Aibreán 1998.

1.The Committee met at 2.40 p.m.

2.Members Present:-

Deputies J. Mitchell (in the Chair), Ardagh, Bell, Dennehy, Doherty, Durkan, Foley, Gildea, McCormack, Rabbitte.

3.The Committee went into private session.

The Committee deliberated.

The Committee went into public session.

4.Discussion on the Annual Reports and Financial Statements in relation to the Education Sector.

5.Witnesses Examined:-

Mr. J Dennehy, (Secretary General, Department of Education and Science), Mr. J Purcell (Comptroller and Auditor General).

6.Adjournment.

The Committee adjourned at 4.44 p.m. until 11.00 a.m.. on Thursday 23 April 1998.

DÉARDAOIN 14 BEALTAINE 1998

THURSDAY 14 MAY 1998

1.Chruinnigh an Coiste ar 11.00a.m.

2.Comhaltaí i Láthair:-

Na Teachtaí S. Mistéal, (i gCeannas), Ardachaidh, de Bheil, Cooper-Ní Fhloinn, Ó Duinneacha, Ó Dochartaigh, Ó Foghlú, Mac Giolla Dé, Ó Luineacháin, Ó Coinín.

3.Chuaigh an Coiste i suí príobháideach.

4.Dréacht-Tuarascáil ar Leagan Tráthúil Tuarascálacha, Cuntas agus Ráiteas Airgeadais Fochomhlachtaí.

Thug an Cathaoirleach an Dréacht-Tuarascáil ar Leagan Tráthúil Tuarascálacha, Cuntas agus Ráiteas Airgeadais Fochomhlachtaí ar aghaidh.

Aontaíodh an Dréacht-Tuarascáil.

Ordaíodh: Tuairisciú don Dáil dá réir sin.

1.The Committee met at 11.00a.m.

2.Members Present:-

Deputies J. Mitchell (in the Chair), Ardagh, Bell, Cooper-Flynn, Dennehy, Doherty, Foley, Gildea, Lenihan, Rabbitte.

3.The Committee went into private session.

4.Draft Report on the Timely Laying of Reports, Accounts and Financial Statements of Subsidiary Bodies

The Chairman brought forward the Draft Report on the Timely Laying of Reports, Accounts and Financial Statements of Subsidiary Bodies.

Draft Report agreed to.

Ordered: To report to the Dáil accordingly.

4. MINUTES OF EVIDENCE

COMMITTEE OF PUBLIC ACCOUNTS

Déardaoin, 26 Márta 1998.

Thursday, 26 March 1998.

The Committee met at 9.30 a.m.

Members present

Deputy Jim Mitchell in the Chair.

Mr. J. Purcell (An tArd Reachtaire Cuntas agus Ciste) called and examined.

Higher Education Authority - Annual Financial Statements 1995 and 1996 and General Report on the Education Sector 1995 [relevant sections]

Mr. John L. Hayden, Secretary/ Chief Executive of the Higher Education Authority was called and examined.

Chairman: We now turn to the report of the Comptroller and Auditor General of the accounts of the Higher Education Authority. I welcome Mr. John Hayden, Secretary and Chief Executive of the Authority. Perhaps you would introduce your officials to the Committee?

Mr. Hayden: On my right is Mary Kerr, the Deputy Secretary and on my left Triona Dooney, Assistant Secretary.

Chairman: I ask the Comptroller and Auditor General to introduce his report on the accounts.

Mr. Purcell: The Higher Education Authority is the body responsible for the funding of universities and designated third level institutions and for the development of third level education to meet the needs of the community. It also has an advisory role in relation to all third level education.

Paragraphs 1 to 8 and paragraph 14 of the general report relate to general matters which arose out of my audit of the universities and for which the universities in question must bear primary accountability. Because of the nature of the issues it is appropriate that the HEA, in its capacity as the main funding source for the universities, should have an indirect accountability for the issues reported. I am conscious of the time so I will go through each paragraph very quickly.

Paragraph 1 gives an indication of how each university spends its money. Paragraph 2 refers to the unit cost mechanism which governs the funding of universities. There is no doubt that the mechanism is an improvement on the former system of annual incremental funding but the model needs further refinement before it can be used as a valid method of comparing the relative cost of courses in the different universities.

Paragraph 3 gives details of the major capital projects being undertaken by the universities. The Committee will note that there is a growing tendency for universities to fully or partially finance capital projects from internal or fund raising sources.

Paragraph 4 outlines the progress to date in moving towards a uniform accounting for universities. This is important at a number of levels but particularly in supporting financial comparisons between the colleges. The Universities Act, 1997 expressly provides for comprehensive accounting and I will be discussing with the Authority and the colleges how best the harmonisation process can be brought to finality in the light of the new statutory requirement.

Paragraph 5 looks at the area of contract research which is assuming a growing importance in the finances of the colleges. I have drawn attention to the need for colleges in general to improve their control and overseeing of research activity so as to ensure that it is being run efficiently and that the risk of loss is minimised.

Paragraph 6 refers to a related issue. That is the setting up of research centres in universities and draws attention to some expensive lessons learned. In the case of one centre in UCD an accumulated loss of £557,000 was incurred and two centres in UCC ran into serious difficulties. This latter incident can be taken up directly with the President of UCC later.

Research is again covered by paragraph 7. The amount of time devoted to research is not separately accounted for in universities’ accounts so most research projects are costed on the basis of additional direct cost plus an overhead. I found that the average overhead recovery at three per cent fell well short of the ten per cent target set by the HEA in 1991.

Paragraph 8 reflects my concern about the level of control exercised over university staff who engage in consultancies. In the absence of effective control a university cannot ensure that the teaching function is not adversely affected, that there is no conflict of interest or abuse of university facilities and that it is not compromised in any way.

Finally, paragraph 14 draws attention to two instances where the HEA felt it necessary to penalise colleges who had inappropriately committed resources. In the case of UCG to staff up-grading without the approval of the HEA and in Trinity College’s case effectively to double funding pension benefits. The once off UCG penalty of £375,000 was spread over two years but there is now an on-going cost of the order of £200,000 per annum being funded by the HEA as a result of the college’s action. Although a £300,000 penalty was imposed on Trinity College the issue there was not as clear cut involving as it did industrial relations matters which eventually had to be resolved in the Labour Court.

Chairman: Mr. Hayden, do you wish to make a brief opening statement to the Committee?

Mr. Hayden: The HEA has been in existence for 27 years and over that time it has worked with the universities and with a number of designated institutions as set down in the Act. From the time of development phase of the universities in the late 1960s we have performed our role effectively, so that the colleges no longer have sizeable deficits. They have, in fact, no deficits at present.

Mr. Hayden: They have no deficits at present and this has been the position for many years. The HEA insisted regarding the extensive deficits at the time, which were approximately 10 per cent of the accumulated deficits of their annual income, that moves be made to reduce them. They were eliminated in the late 1980s. The managements of the universities and the HEA are at one on this need.

There have been changes. Up to early 1990s, we funded the universities on the basis of detailed budgets. We examined these each year and then provided grants. At that stage it was felt there was a need for clearer transparency about the process and also a need for more incentives to colleges to manage the resources well. The authority moved to the unit cost system of funding. This system has been in use since the early 1990s. We consider that it provides valid comparisons of the cost of broad groups of students in the colleges. On balance, it has been welcomed by the colleges for a number of reasons, particularly because they know how the level of their grant is decided. Although our grant is only to the college and it does not have to apply it in any specific way between the faculties, colleges have found that it has relevance to the distribution of funds and expenditure in particular faculties.

Chairman: Does the Higher Education Authority have a function in relation to academic standards in third level institutions?

Mr. Hayden: No. Our function relates to the financial side of the operation of universities. We also have a general function in relation to the promotion and development of higher education. We have taken steps in this regard.

In relation to standards in universities, the White Paper on Education saw a role for the authority with regard to quality. This would probably entail some change in the Higher Education Authority Act. The Universities Act, 1997, made clearer the role of each university in terms of its responsibility for quality. The HEA is also involved in terms of the reviews it may carry out on quality issues in universities.

Chairman: It has some role.

Mr. Hayden: Yes.

Chairman: Does it have a role in relation to promoting and ensuring that all appropriate subjects are explored, taught and researched in the third level spectrum?

Mr. Hayden: Yes.

Chairman: Does it also ensure there is adequate attention given to advanced studies of all varieties?

Mr. Hayden: One of the main jobs for which the HEA was set up in the 1970s was to address the perception that there was widespread overlap and duplication between the universities in terms of faculties and courses. This was particularly the case with regard to the professional faculties because every college wanted to have as many professional faculties as possible. While some rationalisation was carried out in Dublin in certain areas of professional studies, the need is now understood to have similar courses in the different colleges. This is to meet the requirements for science etc. In more recent times the main problem has been to match the output of colleges with the skills requirements. The colleges and the HEA have taken steps in that direction and have contributed greatly to solutions of problems in this area.

Chairman: That sounds utilitarian. Presumably other areas such as philosophy and advanced studies of various types are also addressed. They may not have particular utility at present, but they are nonetheless areas of learning.

Mr. Hayden: If one considers the Arts subjects as a measure, a review of the statistics shows that the proportion of students in that area has not declined, although the number in the system has increased greatly. It has doubled since the early 1980s. As has been the case for the past 25 years, there has been an emphasis in public policy and in the procedures of colleges and HEA on technology and related areas. Business studies could be included in that regard also.

Chairman: How does the HEA assess whether comparative value for money is being achieved from third level institutions? Are international norms, grids or matriculation systems used to point out that, for example, a particular college is a waste of space?

Mr. Hayden: It is a complex task. As the Chairman is aware, international comparisons are particularly difficult where money is involved. It is very difficult to make comparisons on price. However, we know a certain amount. For example, the student to academic staff ratio in the university sector in Ireland is approximately 20 to one. One can find relatively clear comparisons in other countries. The figure of 20 to one is high in comparison but generally many countries which traditionally had very low student staff ratios have moved up as a result of changes in public expenditure policy in the past ten to 20 years.

The second matter which the university presidents often point out to the HEA relate to the accounts of British universities of similar sizes. The level of grants is approximately 30 to 40 per cent higher than in Irish universities. Comparisons are difficult to make. We find it hard to make comparisons in terms of University accounts in Ireland. However, the Irish university system is giving value for money on that basis. An important point is that graduates of the system have always been acceptable internationally. Even when there was a high level of emigration in the mid to late 1980s, graduates secured employment abroad. In comparison to graduates from other countries, they were successful.

Chairman: Reports and accounts for the periods up to 31 December in the years 1989 to 1996 are before the Committee. These involve eight years of accounts. Why is that the case?

Mr. Hayden: We recently signed the 1996 accounts. We send accounts to the Department of Education and Science and its lays the reports and accounts before the Oireachtas on our behalf. We publish our accounts with our annual report and annual student statistics. While there has not been that kind of delay with our annual report and student statistics, there have been some delays. This would account for the more recent years. However, I cannot account for the earlier years. The accounts were signed by the Comptroller and Auditor General and sent to the Department.

Chairman: Who is before the Committee from the Department of Education and Science to deal with this subject?

Mr. Paddy McDonagh, Department of Education and Science, called and examined.

Mr. McDonagh: My colleagues are Mr. Dick Sweeney, manager in the capital area, and Mr. Jack O’Brien, assistant secretary responsible for capital expenditure. The delays in laying the accounts were due to deficiencies in the Department and we take responsibility for that.

Chairman: I am shocked at this admission.

Mr. McDonagh: In the area in question there had been staff turnover over a period of years and there was an oversight in the laying the reports. Steps have been taken in that regard to ensure that there are appropriate procedures to prevent a recurrence.

Chairman: I think you should come back with a written report to the Committee explaining why we are receiving eight years of reports together. It is totally unacceptable.

Mr. McDonagh: I accept that.

Chairman: It is unacceptable and shows an extraordinary laxity on the part of the Department. It is only happening now because the Committee is looking at the HEA accounts. This sort of omission reflects extremely badly on Departments - it leads one to the conclusion that if this Committee did not make checks these things would not happen, when they should happen in any case. I would like, within two weeks, a written explanation as to when you received these reports from the HEA, what action was taken on them and why we are now going back nine years. This is appaling public administration and the same sort of thing is going to come up on the next Vote, dealing with UCC. Are there other areas in the Department where reports are languishing without being tabled?

Mr. McDonagh: There are a number of reports in this area - that is, the universities and the HEA - and that is being addressed at the moment. Steps are being taken and procedures are being put in place to ensure it does not happen in future.

Chairman: That means the reports will be tabled within three months of the Department receiving them?

Mr. McDonagh: The reports will be tabled with all due speed following receipt by the Department with the certificate from the office of the Comptroller and Auditor General.

Chairman: Is there a time limit?

Mr. Purcell: No, Chairman. You may be thinking of value for money reports which are required to be laid within three months of being received by the relevant Minister. As you say, however, it is probably a good rule of thumb.

Chairman: Let us make it a rule of thumb that in future reports should be tabled not later than three months after being received by this or any other Department. Does the Committee agree that and agree to communicate to all Accounting Officers that in respect of any agencies from which financial reports and accounts are to be received, that such reports should be tabled not later than three months after the date of receipt? We should also trawl Departments to discover whether there are any other extraordinarly bad examples like this one.

Deputy Ardagh: Is there any way we could ensure there is no delay on the part of the bodies themselves in presenting the accounts to the Department?

Chairman: That is a valid point. I think what we should do, in consultation with the Comptroller and Auditor General, is to ask the Department of Finance to come back to us within three months of today’s date on this question. That is, in the light of this experience, are there deadlines for the submission of reports by other State agencies or subsidiary bodies reporting to Departments, and for the subsequent tabling of such reports before the Dáil by the Departments? We should also communicate the view of this Committee that any delay in the submission of reports should be eliminated, that specific deadlines should be set, and that all such reports should be tabled not later than three months after receipt. We will write to the Department of Finance on that basis and ask it to respond by 26 June.

Deputy Ardagh: To return to the nuts and bolts of the HEA’s accounts and financial statements, I note in the 1995-6 accounts that in certain cases the comparative figures in the schedules for 1995 in the 1996 accounts do not agree with the 1995 figures in the 1996 accounts. For instance, the research and survey fees are shown in a schedule; in the 1995 accounts they amount to £199,000 while the comparative figure in the 1996 accounts are over £233,000. The figure for 1994 was £144,000.

Mr. Purcell: Perhaps I can be of some help here. In the 1996 account, note No. 9 refers to the restatement of prior year figures and indicates that the comparative figures have been restated on the same basis as the current year figures. In the case of the HEA and the universities - as will be seen when we deal with them - the accounting policies are evolving to make them more meaningful. It is standard audit and accounting practice that one should restate the previous figures so one is comparing like with like within that year. I appreciate what the Deputy says - it can seem anomolous when comparing year with year but the accounting standard does provide for restatement of prior year figures to correspond with the basis used in the current year.

Deputy Ardagh: How is superannuation funded in the HEA?

Mr. Hayden: We have no superannuation fund as such, we pay pensions out of current income. An amount is shown which has been there since before 1981. There is a note on page 17 which states that since 1981 the pension contributions of staff are treated as income of the authority and pension payments to retired staff are charged to its administration and general expenses account. The net superannuation contributions which arose prior to 1981 have, following agreement with the Department of Education and Science, been written back to income and expenditure. This resulted in a transfer of £73,863 to the administration and general expenses account. The 1995 figures were restated accordingly.

Deputy Ardagh: The administration and general expenses account seems to have a constant surplus yet there is an increase of 2 to 2.3per cent each year in income from the Oireachtas. How much is the surplus?

Mr. Hayden: It is £915,000.

Deputy Ardagh: Is it warranted to continue getting increased receipts?

Mr. Hayden: It is not and it will not continue. There are a number of factors here. We were in the same premises for 28 years until March last year. Looking back over the accounts the surplus started to mount up from the end of 1993 onwards. When we reached agreement to have four contract posts at a reasonably senior level we advertised for three of those posts but were unsuccessful in obtaining people with the specialisms we wanted.

We advertised for three of those posts but were unsuccessful in obtaining people with the specialisms we sought. We have always been noted for being prudent and a body that has to look at other people’s accounts and budgets must be seen in that light. When we moved premises last year we did not fully fit out the new premises because there was space there which is intended for the people we have advertised for but have not yet engaged. In the 1995-96 period we should have had certain developments in regard to computerisation in our operations which, because we knew we would be moving, we did not do either in 1995 or 1996. Many of these things have mounted up.

Deputy Ardagh: Did you get a lesser grant in 1997 or have you sought a lesser grant? Do you wish to give money back? You seem to be cash rich because on the balance sheet at the end of December 1995 you have £2.4 million.

Mr. Hayden: I know it appears that way.

Deputy Ardagh: You had well in excess of £1 million at 31 December 1996. Is the HEA undertaking a hoarding exercise?

Mr. Hayden: I would hope not. We hoped to fill fairly senior posts but have not been able to do so because we did not have sufficient room in our old premises in Fitzwilliam Square. When we moved we made some efforts to obtain people with specialisms we were seeking. In addition, the move from an old Georgian house after 28 years involved a major change and it has taken us the past year to adjust.

Deputy Ardagh: What bank do you have your excess cash deposited in?

Mr. Hayden: AIB.

Deputy Ardagh: I would like to move away from the question of accounts for one moment and seek an explanation in relation to the internet. The Oireachtas has an excellent internet service from the HEA net via the Department of Finance. During what hours does the internet service operate and what are the financial implications to the HEA of operating that for the Government service? To what extent is it operated by the Government?

Mr. Hayden: This service is now provided by HEANet Ltd., a private company which was incorporated last year. For the previous 15 years the HEA, in co-operation with the computer services in the universities, had developed this service. Before the internet, it was originally intended to provide a service linking Irish universities. It was promoted from the college side and we were delighted to assist them. The people involved were highly skilled, being involved in these subjects at university level. The development of the service was such that all the higher education institutions, North and South, now have access to it. There are reasons why it is not a commercial service. For example, if you deal with Telecom Éireann there are different tariffs and questions as to whether you are a commercial provider. The CMOD in the Department of Finance sought tenders for the supply of a service and HEA Net was successful.

Chairman: So the HEANet provides a joint access to each university database?

Mr. Hayden: That is one side of it but, more importantly, it gives you international links. Fortuitously, that is what has happened over the years.

Deputy Ardagh: How much does Telecom Éireann charge you annually for using its lines for the applications?

Mr. Hayden: I do not know that figure now. It is part of HEA Net Ltd. We have one director, Ms Mary Kerr, on the board of HEANet.

Deputy Ardagh: Who owns HEANet Ltd.?

Mr. Hayden: The universities and RTCs, the HEA and the Department of Enterprise, Trade and Employment.

Deputy Ardagh: Is the company audited by the Comptroller and Auditor General?

Mr. Hayden: It is not.

Deputy Ardagh: Who is the auditor?

Mr. Hayden: There are private auditors.

Deputy Ardagh: Are there many quangos like this outside or within the university system that are not within the remit of the Comptroller and Auditor General, that you are aware of?

Mr. Hayden: This is the only company that I am aware of that developed from a HEA initiative. The HEA agreed to this along with the individual universities, who were the original partners in the enterprise. It was felt that this kind of operation did not suit public service organisations because one has to operate in a certain way and staff have to be employed on contracts that are more common in the private sector. It was felt that, generally, this was the best way of keeping up with developments.

Deputy Ardagh: Who are the shareholders of this company?

Mr. Hayden: The shareholders are the HEA, the Department of Enterprise, Trade and Employment and higher education institutions, particularly the universities. It is a company limited by guarantee which specifically cannot pay dividends.

Mr. Purcell: To respond to Deputy’s question, quite a large number of companies operate in the university sector, under the auspices of each university, of which I would not be the statutory auditor. The reason for this is historical. The accounts of most of the universities are audited on behalf of the governing bodies by a private firm of auditors. Being the statutory auditor I have a specific responsibility and I take account of those audits in performing my audit to avoid duplication. That concerns the universities’ accounts themselves but allied to that there are campus companies and joint ventures within the university sector where I am not the auditor.

Deputy Ardagh: I understand there would be outside auditors but can they also report to you, as Comptroller and Auditor General, so that you can report to the Committee of Public Accounts and act as the conduit to ensure those accounts are brought before us?

Mr. Purcell: The thinking behind such companies being audited by private sector auditors was that the universities would feel they are not State moneys, but moneys such as fund-raising and other income, which in the case of campus companies, might be an efficient way of say providing residences. That is the basis on which they are not audited by the Comptroller and Auditor General. This area will have to be revisited in the context of the Universities Act, 1997, which - on the face of it and certainly on a lay man’s reading of it - envisages there should be comprehensive accounting by the universities. There may well be issues that have to be teased out both with the universities themselves and in conjunction with the HEA, which has an overseeing function in relation to the university finances.

Deputy Ardagh: Any organisation in which a State body has an interest through a shareholding, ownership or control, should be subject to scrutiny by the Committee of Public Accounts.

This would ensure that not only the State body but any financial undertaking under the auspices of that Department or body should be scrutinised.

Chairman: We would wish to ensure that such vehicles, however necessary they may be, could not be used as a means of hiding public expenditure or bringing it out of the realm of accountability.

Deputy Ardagh: Or hiding potential income.

Chairman: Mr. Hayden, do you have an internal auditor?

Mr. Hayden: We have a staff of 25 people and do not have an internal auditor. However, Ernst and Young bring our books up to the stage where we can present accounts.

Chairman: Do you have any overseeing role in relation to the audit and accounts of the universities and other third level institutions?

Mr. Hayden: We would see the C&AG having that role.

Chairman: The C&AG acts on behalf of the Dáil. We would expect all Departments to have an internal auditor so that they do not have to wait for the C&AG to highlight things and so that they can ensure spot checks from time to time on areas under their control. Do you have that?

Mr. Hayden: No. The types of relationships in terms of work which we have-----

Chairman: However, you fund the universities.

Mr. Hayden: Yes.

Chairman: Do you see yourself as having a role with regard to efficiency, effectiveness, value for money and fraud?

Mr. Hayden: We do. The Universities Act, 1997, provides that the format of the accounts must be approved by the HEA. Before the legislation was enacted we held discussions with the universities on the general area of financial reporting to the HEA and to the public. A considerable amount of work has been done on this of which part has been harmonisation of accounts, which is referred to in the report by the C&AG.

I do not regard campus companies in the same way as the HEA. However, what we have said about campus companies in the financial reporting document which we issued to the colleges provides a basis for reporting on activities and for ensuring that there is no untoward risks to the university in these types of operation.

Chairman: While that is important, I am surprised that you, as chief executive, feel it right to give out money but not to undertake spot or audit checks on how the money is being spent.

Mr. Hayden: First, the colleges submit audited accounts to us which are compiled by their auditors. Second, the C&AG undertakes an audit of the universities. Third, there are certain returns on which the income of the colleges depend, for example, the student numbers are an important consideration. Under the unit cost system they have to certify that these figures are correct. There is not much more we could do, short of undertaking a further audit using the service of auditors.

Chairman: Are you familiar with the concept of internal audit?

Mr. Hayden: Yes.

Chairman: Its purpose is to spot check, review, visit and take an alternative look at things. Do you not see the HEA having a role in that respect?

Mr. Hayden: We have encouraged the colleges to use internal auditors. Nearly all of them have their own internal auditors who naturally report to the governing body or to a committee of the governing body.

Deputy Dennehy: Does the Department of Education and Science undertake that role in the third level sector?

Mr. McDonagh: The Department of Education and Science has an internal audit service, which I understand to be a support to an organisation in relation to its own activities. In other words, our internal audit service, in the main, carries out reviews and internal audits in the Department of Education and Science in terms of its own control procedures, where it considers that procedures may be deficient, and makes recommendations to the units in the Department as to possible deficiencies. The sections are then required within a period of time to report back to the audit service on the steps they have taken to correct control procedures or other such procedures.

I may be incorrect, but it is my view that, generally, an internal audit function tends to occur in fairly large organisations. There are certain minimum sizes in the private sector where it may not be economic to have such a service. In terms of the HEA, I would not consider an internal audit function as something that would be justified in such a small organisation.

It is important that the HEA exercises its role in relation to monitoring and controlling the activities within the parameters of the Universities Act, which recognises a certain autonomy and independence for the institutions. It is also important for the HEA to monitor. It issues moneys to the universities. For example, with regard to the free fees initiative, it issues all the fee money to the universities on foot of certified statements from them regarding their numbers of students and the fee per student.

If I understand it correctly, the certification which the universities sign put down a marker that the HEA may undertake on spot examinations of books if necessary. In terms of any control or monitoring procedure, one must weigh up the cost of the control against the savings that may accrue. If the cost of the control is greater than the savings that might accrue one would have to take the view that one cannot go beyond a certain level of detail regarding control.

Deputy Dennehy: The C&AG has not had any problems. However, is there a watch dog role, for example, are there unannounced examinations?

Mr. McDonagh: Of universities?

Deputy Dennehy: With regard to funding and the way it is deployed.

Mr. McDonagh: The HEA would have that statutory function in relation to allocating resources and satisfying itself as to the economy, efficiency and effectiveness in their deployment. The Department of Education and Science has an overall responsibility with regard to the education system generally and, in this instance, with regard to the HEA.

Chairman: It is clear that there is not a sharp focus with regard to the use of public moneys in this area. We have a sleeping dog here which is nine years in gestation. You must look at your financial controls and your own sense of accountability. I am not getting any sense of accountability for what are huge sums of public money. It seems to me, Mr. Hayden, that you appear to consider it unnecessary to spot check for inefficiencies, fraud and ineffectiveness and that the HEA can delegate this function upwards to the C&AG or downwards to the universities. We are not satisfied with that. I am surprised that you, as Accounting Officer for the HEA, takes such a relaxed view. Mr. McDonagh appears to consider that this is acceptable.

We must sharpen the focus of accounting officers throughout the public sector. We need better performance and better value for public money. Old habit will no longer be acceptable, especially as we go into EMU. We need much better performance and a heightened understanding by accounting officers of their role in this respect. The old laxities are out.

Mr. Hayden: I said earlier that the HEA has worked with the colleges for the past 27 years. In that time, deficits, which until recently were so characteristic of State bodies, were eradicated in the universities in the 1970s. In addition, some very big accumulated deficits were cut down and over a longer period eliminated. This was done by a number of means.

For example, annual budget meetings in which officials of the HEA and officers and members of the university governing bodies took part, an overseeing role in regard to the implementation of Government policy on pay and conditions, etc.

Chairman: I do not want to cut the witness short, but I request the Department and the HEA to reflect on what I have said and to write to the committee within three months on their reflections on whether the internal audit controls and the visitation role of the Department into third level institutions which receive grants from the HEA are adequate or need to be updated in the light of modern expectations. We would like to have that report by this day three months, which is 26 June.

Deputy Dennehy: I was amazed to see this report on the agenda. It is grossly unfair to the HEA that this could happen. It is an offence in the private sector. I agree totally with the chairman’s proposal that a proper and formal system should be put in place for tabling such reports.

The C&AG’s staff has done a value for money examination of the question of central purchasing procurement. Central purchasing has worked extremely well in the health boards and has resulted in great savings. What are Mr. Hayden’s views on the concept?

Mr. Hayden: The last time I attended this committee it was in regard to that topic. The colleges were represented by their finance officers at that meeting. The HEA has felt since the 1970s that elements of procurement would have cost advantages for the universities if there were co-operative arrangements between them. That would not necessarily mean joint purchasing in the sense of one agent purchasing and storing everything but it would be worth considering the advantages of central purchasing in some areas.

Following that meeting, which took place on 26 March 1997, the chief financial officers of the universities and the HEA executive met on many occasions. I will be writing shortly to the C&AG informing him of the various steps which have been taken by the universities in this regard, first, to get their purchasing procedures in line with those laid down in each college and, second, in areas where they are carrying out joint surveys on the lower cost implications. That job must fall primarily on the colleges and they are certainly running with a number of those items.

Deputy Dennehy: I am very anxious to see a positive approach being taken to this matter. The universities spend £76 million on purchasing. When this idea was first mooted at the health boards the reaction was that it was very difficult for the boards to work in tandem. Many reasons were suggested why it could not be done but people suddenly realised that the joint purchasing of drugs and so on would mean savings. The concept should be pushed very strongly.

I know the university finance officers were concerned about the abolition of undergraduate fees a couple of years ago. Have those fears been realised or how has the situation evolved? Is there still a problem with funding? It was said at the time that the colleges would find themselves looking for 100 per cent central funding and they were anxious not to go down that road.

Mr. Hayden: There has been no deterioration in public funding of higher education since that change. A procedure, to which Mr. McDonagh referred, has been set up whereby the fees are provided for certified numbers of students in each college. There has been no problem in that regard.

There have been some administrative problems for the universities in adopting to this because if, for example, a student drops out at Christmas the fees in respect of that student are not paid for the second half of the year. There must also be a reregistration system. These are major administrative problems as there are, for example, 17,000 students in UCD and over 10,000 students in UCC. However, the colleges’ finances have not deteriorated in any way since that change.

Deputy Dennehy: The problem was that the people involved did not want to be fully dependent on central funding.

Mr. Hayden: The separation of the grant between the general grant that the State gives and a fee per student has helped both the colleges and the finance system.

Chairman: We note the report. Thank you.

The witness withdrew.

UCC - Annual Financial Statements 1994-5 and 1995-6 and General Report on the Education Sector 1995 [relevant sections]

Dr. Michael Mortell, President, University College Cork, called and examined.

Chairman: We now turn to the annual financial statements of UCC for 1994-5 and 1995-6 and the relevant sections of the general report of the Comptroller and Auditor General on the education sector. We also have statements for the years ending 30 September 1990-6, which I presume were tabled by the university in good time. I welcome Dr. Mortell, the President of UCC, and ask him to introduce his colleagues.

Dr. Mortell: I am accompanied by Mr. M.F. Kelleher, who is the Secretary and Bursar, and Mr. Edwin McCarthy, who is the Director of Buildings and Estates.

Chairman: They are both welcome. I ask the C&AG to introduce his report.

Mr. Purcell: The sections of my general report which relate directly to UCC - which is how I refer to it in my report although I know it is now called the National University of Ireland, Cork - are paragraphs 11, 12 and 13. Part of paragraph 6 must also be considered in the context of the college’s accountability.

Paragraph 11 draws attention to the circumstances in which three capital projects exceeded their planned budgets by substantial sums. The main contributory factors to the overruns were additional work commissioned after the projects had commenced in response to user demands and the need to upgrade infrastructure associated with the developments.

In light of its experience with these projects, the college has tightened up its procedures which should enable it to exercise more meaningful financial control in future.

The other part of paragraph 11 refers to an uncertainty about the funding arrangement for the development of Phase VI of the National Microelectronics Research Centre. In light of the failure to fully comply with public procurement procedures, the Committee will be glad to know the college has assured me that the project will, as originally intended, be totally financed from sources other than the State.

Paragraph 12 draws attention to the financial results of the Cork University Press which operates under the auspices of the college. I was concerned about the continuing level of subvention required to keep the company afloat. Some £472,000 was provided by the college in the three years to 1995 and, despite an expectation that the financial position would improve, a further £170,000 was required in 1996 and £190,000 in 1997. I appreciate the college regards the company as a valuable resource and that it is a judgment call for the college as to its future. However, any future decisions should be tempered by more realism than has been evident up to now. To the best of my knowledge and perhaps members of the HEA might be able to confirm it, none of the other universities has a comparable facility and not on anything like the same scale.

Paragraph 13 records that the administration of Cork University Dental School and Hospital left much to be desired in a number of respects. The college acknowledged that the hospital was in a state of transition from a management point of view for some years but that action is now being taken to remedy the matter.

Returning briefly to paragraph 6, two research centres at the college experienced financial difficulties. One of these, whose net indebtedness to the college was £228,000 at the end of September 1997, is being closed down. The £228,000 and any additional liabilities arising in the interim will be written off by the college in due course. The other centre had a net deficit of £280,000 at September 1997. Certain cutbacks have been implemented in this instance and the college expects the deficit to be eliminated over a period of time.

Chairman: Would Dr. Mortell like to make a brief opening statement?

Dr. Mortell: I wish I could say I am happy to be before the Committee! However, I come with an easy conscience and will answer any question the members may wish to ask.

UCC is a public institution supported by the taxpayers of the State. I recognise it is accountable and that public accountability to the elected representatives of the people is the very essence of democracy.

I wish to make some general points at the outset. It is important to realise that capital projects take anywhere from three to five years from initiation to completion. Over the past decade, UCC has been growing at an unprecedented rate in terms of students, staff and research activity. Changes made in building specifications all had prior approval and were implemented at competitive prices. The projects thus came within the approved budgets. Over the past decade, UCC has always worked within its overall budget, has never had a recurrent deficit and its previous recurrent deficit was eliminated.

UCC has just come through a period unprecedented in its 150 year history. Its student numbers have expanded from 6,500 to 11,000 in ten years. We have never before witnessed expansion on such a scale. This huge growth has put enormous strains on infrastructure, facilities and staff, both academic and administrative. The annual budget is now £70 million whereas, ten years ago, it was £26 million. The direct State grant now accounts for less than 50 per cent of the total budget. Today, external contract research, at £17 million per annum, accounts for nearly 25 per cent of the total budget of UCC. Ten years ago, it was £2 million or 8 per cent of the budget. This shows the enormous increase in research activity with consequent pressure on infrastructure and facilities. Capital expenditure in the past five years was just under £40 million and less than half of this came by way of State capital grants. We have balanced our budget each year.

We have had unprecedented growth in student numbers and in research activity over the past decade. This has been to the benefit of the State and is, in my view, a major factor underpinning the very buoyant economy. UCC is now the second largest university in the State and, at £17 million, has the highest per annum contract research income. This £17 million directly supports over 400 jobs on the UCC campus. It is a medium sized industry. As regards UCC’s effect on the regional economy, it is sufficient to note that its economic impact has been measured at £150 million per annum and it supports, directly or indirectly, 4,300 jobs in the Cork area.

I recognise the importance of the work of this Committee and I will do my best to answer any questions in a straightforward and forthright way.

Chairman: Dr. Mortell, is it correct to state that you are an academic?

Dr. Mortell: It depends on who you talk to, Chairman.

Chairman: My experience is that academics are not great financial people. Is that a fair generalisation or can you assure me that, when it comes down to specifics, it does not apply to you?

Dr. Mortell: When it comes to specifics, it does not apply to me. I can give examples of many academics who know how to run a business.

Chairman: How did the capital project overruns happen?

Dr. Mortell: I tried to advert to the fundamental circumstances in my opening comments. These projects can take anywhere up to five years from initiation to completion. The institution was changing at an enormous rate at the same time.

The food science project was cited. I will give an example of the kind of change taking place in the faculty of food and science while this project was ongoing. The number of students increased by 65 per cent; the number of full-time permanent staff increased by one third; the research activity at the beginning of the period was a little over £1 million p.a.; today it is over £5 million p.a. and there are 80 research staff in the building. If we had abided by the original concept, the necessary expansion could not have taken place, we would be knocking on doors looking for a second building, and the research activity could not take place. It is essentially a combination of the timescale and the rapid rate of change. We got very good value for money.

Chairman: That may be your opinion, but the initial budget for the Granary Theatre, for example, was £450,000 while the final completed cost was £911,000, over double the initial figure.

Dr. Mortell: The figure of £450,000 is a red herring. That was the cost of the concept when first put forward in the context of a particular site with which, due to planning problems and objections from people in the neighbourhood, we were unable to proceed. We had to move to a new location on the western road, the budget for which was £750,000. Therefore the increase was from £750,000 to over £900,000. Why did the question of the Granary Theatre arise? We had an old Granary Theatre. There was a fire in the NMRC. In expanding the NMRC it was necessary to move into the old Granary Theatre, giving rise to the need for a new Granary Theatre. It was necessary to put in place infrastructural works for the new site. These account for a large fraction of the overrun. As we progressed people wanted different inside facilities which also cost more money but which the UCC budget will take care of without looking to the State.

Chairman: That may be, but the necessity of providing extensions may be indicative of poor planning from the outset. I note that the same situation arose with the student centre. The initial estimate was £3 million but the end cost was £4.34 million and it was necessary to change the site. Is this not another example of bad planning and foresight?

Mr. Mortell: The site was changed due to the democratic process. We applied for planning permission on a site owned by UCC but were unable to proceed. That cost money. We expanded the student centre at additional expense, but it is not costing the State extra money. The student centre was built on the basis of a student levy which the students agreed to. We were the first university in which students agreed to fund services for students from their own pockets.

Chairman: Parents such as I, who are told there is free education, end up paying for many such things. What are the financial controls? Can you describe the financial department of UCC? What interest do you take in financial controls? What are the reporting relationships? Is there an internal audit function separate from the financial section? Who is responsible for the report?

Dr. Mortell: Essential financial control comes through the finance committee, a sub-committee of the governing body. I am a member of that committee, as is the Secretary and Bursar. The chairman is a member of the governing body and, for many years, has been an outside member of the governing body. The current chairman is Dr. Tom Cavanagh. The budget for any proposal comes before the finance committee which must decide whether to recommend the proposal to the Governing Body which essentially determines whether a project is proceeded with. As the project proceeds, there is a regular financial reporting relationship to the finance committee. There is also a buildings committee which I chair and which oversees the specifications and ongoing building process. The buildings committee reports to the finance committee on matters which cost money. Mr. Barry Madden is the internal auditor for U.C.C.

Chairman: Is the internal audit section independent of the finance department?

Mr. Mortell: No, it is part of the finance department.

Chairman: That is something we do not normally encourage. To whom does the internal audit section report?

Mr. Mortell: It reports to the Secretary and Bursar.

Chairman: This committee is keen on there being an independent internal audit section. It should be independent of the finance section and should have direct access and report to the chief executive officer. Perhaps this is something that could be considered.

Deputy Dennehy: I do not know whether it is the time of day or a show of confidence by the rest of the committee in the ability of Cork people to do their own business, but there are not many Members present. I welcome Dr. Mortell, Mr. Kelleher and Mr. McCarthy. I had the privilege of serving with them for one year on the board of governors, ex officio, when I was lord mayor in the mid 1980s. I appreciate the developments in the university since that time. I am proud of its achievements and congratulate those involved. The university performs very well in almost all markings, including research, funding, etc., something which is outlined in the general report of the C&AG. It is probably very difficult for Dr. Mortell to explain why a building must be extended or why it becomes more costly, but I understand from local knowledge what is happening. Is there any relationship with the IDA, the business community and related bodies in the region? Have there ever been requests to respond to their needs?

Mr. Mortell: The major link between the IDA and UCC is through the NMRC, the National Microelectronics Research Centre. I am sure no high-tech industry in the electronics or computer sectors comes to Cork without taking an intensive look at the NMRC. Three or four years ago the centre was described as a national strategic asset in a report by the then Department of Industry and Commerce. It has a budget of £7.5 million, £5 million of which it raises itself. There are 220 staff working in it. It is a focal point for high-tech industry in the Cork area. For example, General Instruments in Macroom moved its research department from New Jersey to Macroom in order to be near the NMRC. This is an example of the interaction between the university and bodies such as the IDA.

Deputy Dennehy: Why has UCC been more successful than other universities in achieving research, outside and contract funding?

Dr. Mortell: I thought the answer to that question would be clear to a Cork man!

Deputy Dennehy: Perhaps Dr. Mortell will tell the rest of the country. In the mid 1980s it was recognised that we would be unable to fund education.

It was also recognised there would have to be a move to try to get the private sector involved. It only started when Dr. Mortell took over. Is there some special strategy and what was the attraction? Others can learn from Cork. If there is a higher standard in any application - concerning health, for example - we should try to apply it globally.

Dr. Mortell: It was quite clear in the mid 1980s that the kind of research Ireland needed to do could not come about if it was being funded solely through the public purse. We have some very good academic entrepreneurs on the UCC campus. They look around to see where they can obtain money to support the kind of research they want to do. We were lucky at that time. We were part of the EU and there was a pot of money there so our people attacked it. By getting money out of the EU they were then able to build up teams around them.

Many young Irish people went to Europe and the United States after taking their primary degrees. They obtained Master’s degrees and PhDs and vast experience abroad. In particular, if they were married to Irish women and had young children they were thinking about coming home. We in U.C.C. could provide them with the opportunity of joining those research teams, whereby they could have the same kind of professional career in Cork as in New York or anywhere else.

It was a bootstrap operation. You got in place a core of staff which bid to the EU for Structural Funds or Research Framework money. They then built up the core and the bigger you were the better able you were to bid for more money. Ten years ago the number of people we had who were supported by contract research was less than 200, yet today there are over 400. The researchers, academic entrepreneurs, did that. We put a system in place to encourage them. When we appointed people they were told specifically and straightforwardly they could not expect to come to central funds to support their activities. They were encouraged to get external funding themselves and they accepted that. It is an attitude of mind or a mind-set.

Deputy Dennehy: We are trying to develop that general type of philosophical approach. You mentioned EU funding. What is the importance of a university in the context of regional development?

Dr. Mortell: The chemical pharmaceutical industry and the Food industry is very strong in the Cork area. UCC has strong chemistry, biochemistry, microbiology and Food Science departments and such companies feed off our graduates. I have already mentioned the NMRC and the effect it has. The aquaculture unit, part of the Zoology Department, is very involved with the aquaculture industry in the south west. One of the projects they have undertaken is the development of a new form of flat fish which the industry can farm. They can now farm turbot and whiting. This work has expanded what fish farmers can do and it gives them a new export. That is a further example of what these academic centres do in a practical way.

Deputy Dennehy: I wish to revert to the points made by the Comptroller and Auditor General. We in Cork are very proud of Cork University Press, even though it cost some money. We see it locally as an asset. I was disappointed to hear the Comptroller and Auditor General mention that other universities did not think it was unique. That should not be a point against it. According to Mr. Purcell’s comments, it was noted that a business plan was prepared for the press for the period 1996-99 and consultants were commissioned. I know the Comptroller and Auditor General has doubts about its viability but to put it into context will Dr. Mortell tell us why UCC should have a university press?

Dr. Mortell: According to section 12(i) of the Universities Act, 1997, the objects of a university include “to disseminate the outcome of its research into the general community”. That is one of the stated objects of a university. Cork University Press clearly does that. During the past year it published a book entitled An Atlas of the Irish Rural Landscape. It was on The Irish Times best-seller list for about ten weeks. The book explains where the physical landscape of Ireland came from. It sold about 12,000 copies, which is certainly getting the outcome of research into the general community, as the Act requires us to do.

Chairman: Could it be achieved more economically? Could some commercial publishing organisation have taken this contract rather than using the expensive way in which it was done?

Dr. Mortell: I accept that the kinds of overruns we have had are not acceptable to this Committee, to the Comptroller and Auditor General, or to University College Cork. Our intention is to get the subsidy to £100,000 per year. We regard that as being acceptable. That is our goal and objective. We have moved a substantial way towards that. Out of the central funds of University College Cork we are prepared to put in £100,000 a year and the press will have to continue on that basis. We accept that the kind of money involved in the overruns to date is not good enough. To put £100,000 per year in context, it is one seventh of 1 per cent of the total budget of UCC.

Chairman: You have painted a very bouncy confident picture for Cork University.

Dr. Mortell: Thank you, Chairman.

Chairman: I am aghast. It had not occurred to me that, perhaps, we owe the great Celtic tiger’s existence to Cork. I hope all your students have the same confidence that you have displayed.

The witnesses were discharged.

The Committee adjourned at 1.50 p.m.

COMMITTEE OF PUBLIC ACCOUNTS

Dé Máirt, 7 Aibreán 1998.

Tuesday, 7 April 1998.

The Committee met at 2.40 p.m.

Members Present

Deputy J. Mitchell in the Chair

Mr. John Dennehy, Secretary General of the Department of Education and Science, called and examined.

Chairman: Mr. Dennehy, you are welcome. The Committee has called you before it today because of the catalogue of reports tabled before the Dáil in the last few weeks, even in the last few days and hours. Will you account for why those reports accumulated in the Department without being laid promptly before the Houses of the Oireachtas? How can the Committee call you to account for all these reports, some dating back to l986, at this meeting?

Mr. Dennehy: In the past number of weeks, the Department of Education and Science has brought up to date the laying of accounts before the Houses of the Oireachtas on a range of third level institutions. That process will be completed this week with the laying of the accounts of the Dublin Institute for Advanced Studies. The various accounts in question are required to be laid under a number of different legislative provisions. I regret the delay that has occurred in the laying of these accounts which arose from the absence of clear written procedures in the section involved and a high turnover of staff in the higher education area of the Department during the years in question. I assure the committee that following my recent appointment as accounting officer, new and stringent procedures are being finalised to ensure that the accounts are laid before the Houses of the Oireachtas in a timely fashion. I am also making arrangements to convene immediately after Easter a meeting of all senior officials, from principal officer upwards, in the Department to ensure the importance of compliance with the procedures being drawn up is impressed on all staff and that absolute priority is given to the laying of accounts and reports. I intend to further strengthen staff training in this area at all levels throughout the Department. As the Chairman suggested previously, a timeframe of three months from the receipt of audited accounts in the Department seems more than appropriate. In this regard my objective is to aim to have this task completed in a much shorter timeframe.

I express my profound and sincere apologies and that of the Department officials to the committee for the inordinate delay in the laying of these accounts. Following my appointment as an accounting officer, I assure the chairman that this problem will not occur again.

Chairman: Your apologies have to be accepted by the committee given that you were only recently appointed accounting officer and cannot be held to account for this lapse. This would not have come to light if the Committee on the hearing of 26 March has not asked why the higher education authority reports had not been tabled from 1989 to date and now this extraordinary catalogue of reports has come to light.

I am not impressed that the Department does not appear to read the minutes of the VECs reports or to not take them as some sort of indication of what is happening in the VECs. I do not know the position in regard to other subsidiary bodies. Following this example, I will propose to the committee that clear guidelines be set for all Departments and I will also take this up with the Secretary General of the Department of Finance. The Committee cannot allow such a raft of accounts to come before it because we have no chance to consider these accounts without taking some action. The committee will have to consider what action it should take, whether they should come before the Dáil in the form of a special report to highlight these lapses in the Department of Education and Science.

Deputy Ardagh: I accept what the Secretary General said. Two timeframes were requested on that date. The chairman requested that the report of accounts be laid before the Houses of the Oireachtas within three months of the date it comes to the Department, but I also requested that the report should be sent to the Department within three months of the end of the financial year.

Mr. John Dennehy: That timeframe depends on the Comptroller and Auditor General’s consideration of some of these reports. A clear instruction has been sent to staff that when reports and accounts come in they must be dealt with as a matter of priority and laid before the Houses within the shortest possible timeframe.

Mr. Purcell: The Department cannot lay the audited accounts before I have appended my report to them.

It would be unrealistic to have the accounts for each of these bodies audited within three months of the end of the financial year. The resources we would need to achieve that would be a huge increment on what we have at present. I intend to address this matter in my strategy statement which will be put before the Dáil next month. I suggest that we must have a touch of realism about what can be delivered within a reasonable timeframe with the resources at my disposal.

Deputy Ardagh: Would it be reasonable to expect that the accounting officer in each institution would have accounts prepared for audit within the three month period?

Mr. Dennehy: I understand a period is stipulated in some of the Acts. We also intend to meet the accounting officers of all these institutions with a view to tightening procedures because what has happened is unacceptable. It must not be allowed to happen again under any circumstances. We will do everything in our power to ensure it does not.

Deputy Ardagh: The Institute for Advanced Studies in Dublin is a great institution. I always assume it is filled with laid back professors who have a lot of time to think. However, I am sure the thought of doing financial statements would be anathema to them. How far behind is the college in preparing its accounts for audit?

Mr. Dennehy: The report of the Comptroller and Auditor General was appended to the 1991 accounts in 1993. Accounts from that period up to now comprised the final group of reports in this area. We sent a memorandum to Government today because it technically lays those accounts before the Houses of the Oireachtas. My understanding is that a Government decision was taken today to do that.

Deputy Ardagh: It is more up to date than Dublin City University.

Mr. Dennehy: Yes, up to 1996.

Chairman: I intend to recommend to the Committee that we report to the Dáil on this subject and submit draft guidelines to deal with timetables for the provision of accounts to the Departments and to the Comptroller and Auditor General and for the laying of those accounts before the Committee. We will bring forward written recommendations within a couple of weeks.

Although this happened during the terms of your predecessors, you, Mr. Dennehy, are the accounting officer now. However, there is no sense in being overly critical of you. The Committee is appalled that so many accounts of subsidiary bodies have been left lying in the Department, particularly in light of the fact that we have just spent two and a half hours dealing with the BTSB, which represents one of the most appalling lapses in the public service. I thank you for coming before us but you will be hearing more about this.

The witness withdrew.

The Committee adjourned at 4.45 p.m. until 11 a.m. on Thursday, 23 April 1998.

APPENDIX A

ORDERS OF REFERENCE

1.STANDING ORDER AND TERMS OF REFERENCE - FIRST REPORT OF THE STANDING SUB-COMMITTEE ON DÁIL REFORM ON ESTABLISHMENT OF COMMITTEES IN THE 28th DÁIL

Standing Order 149

“(1)There shall stand established, following the reassembly of the Dáil subsequent to a General Election, a Standing Committee, to be known as the Committee of Public Accounts, to examine and report to the Dáil upon:

(a)the accounts showing the appropriation of the sums granted by the Dáil to meet the public expenditure and such other accounts as they see fit, (not being accounts of persons included in the Second Schedule of the Comptroller and Auditor General (Amendment) Act, 1993) which are audited by the Comptroller and Auditor General and presented to the Dáil, together with any reports by the Comptroller and Auditor General thereon:

Provided that in relation to accounts other than Appropriation Accounts, only accounts for a financial year beginning not earlier than 1 January 1994, shall be examined by the Committee:

(b)the Comptroller and Auditor General’s reports on his examinations of economy, efficiency, effectiveness evaluation systems, procedures and practices; and

(c)other reports carried out by the Comptroller and Auditor General under the Act.

The Committee may also suggest alterations and improvements in the form of the Estimates submitted to the Dáil.

(2)The Committee may proceed with its examination of an account or a report of the Comptroller and Auditor General at any time after that account or report is presented to Dáil Éireann and

(a)the Committee shall have the power to send for persons, papers and records as defined in Standing Order 79;

* (b)power to take oral and written evidence as defined in Standing Order 78A(1)

(c)power to engage consultants as defined in Standing Order 78A(8); and

(d)power to travel as defined in Standing Order 78A(9).

(3)The Committee shall refrain from enquiring into in public session, or publishing, confidential information regarding the activities and plans of a Government Department or Office, or of a body which is subject to audit, examination or inspection by the Comptroller and Auditor General, if so requested either by a member of the Government, or the body concerned. The Committee shall also refrain from enquiring into the merits of a policy or policies of the Government or a member of the Government or the merits of the objectives of such policies.

(4)The Committee may, without prejudice to the independence of the Comptroller and Auditor General in determining the work to be carried out by his Office or the manner in which it is carried out, in private communication, make such suggestions to the Comptroller and Auditor General regarding that work as it see fit.

(5)The Committee shall consist of twelve members, none of whom shall be a member of the Government or a Minister of State, and four of whom shall constitute a quorum. The Committee shall otherwise be constituted according to the provisions of Standing Orders 78 and 82, and so as to be impartially representative of the Dáil”.

Motion setting up Public Accounts Committee (14/10/97):

“Go ndéanfar de bhun Bhuan-Ordú Uimh. 149 de na Buan-Orduithe i dtaobh Gnó Phoiblí, an Coiste um Chuntais Phoiblí a cheapadh.

That, in pursuance of Standing Order No. 149 of the Standing Orders relative to Public Business, the Committee of Public Accounts be appointed.”

Motion appointing Members of the Committee of Public Accounts (16/10/97):

“go ndéanfar na comhaltaí seo a leanas a cheapadh ar an gCoiste um Chuntais Phoiblí:—

that the following members be appointed to the Committee of Public Accounts:—

Deputies Seán Ardagh, Beverly Cooper-Flynn, John Dennehy, Seán Doherty, Bernard J. Durkan, Denis Foley, Thomas Gildea, Conor Lenihan, Pádraig McCormack, Jim Mitchell, Pat Rabbitte and Emmet Stagg”

Motion appointing Deputy Michael Bell in substitution for Deputy Emmet Stagg (20/11/97):

“go ndéanfar an Teachta Emmet Stagg a urscaoileadh ón gCoiste um Chuntais Phoiblí agus go gceapfar an Teachta Micheál de Bheil ina ionad;

that Deputy Emmet Stagg be discharged from the Committee of Public Accounts and Deputy Michael Bell be appointed in substitution for him”

APPENDIX B

REPORTS (IN RELATION TO THE EDUCATION SECTOR) LAID BEFORE THE HOUSES SINCE 12 MARCH 1998

REPORTS (IN RELATION TO THE EDUCATION SECTOR)LAID BEFORE THE HOUSES SINCE 26 MARCH 1998

* (the order was amended by the inclusion of this provision in October 1996)