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Appendix C - Additional Information:E109/407/99 6 June 2003 Ms. Sandra Hogan Clerk to the Committee Joint Oireachtas Committee on Finance and the Public Service Oireachtas Éireann Leinster House Kildare Street Dublin 2 Dear Ms. Hogan, I refer to the presentation given to the Joint Committee by Department of Finance officials on the Civil Service Code of Standards and Behaviour on 28 May 2003. Various issues were raised by the Committee members during the discussion that followed the presentation and certain material/documentation was requested by some of the members. To that end, I enclosed the following: •a guidance note on the subject of civil servants and politics, •copies of the main circulars governing civil servants and politics (circulars 23 of 1925, 21 of 1932 and 7 of 1999), and •a copy of the Code of Practice for the Governance of State Bodies. Information was sought on the restrictions imposed by other Administrations on civil/public servants leaving the public service for employment in the private sector. Please note that the presentation of 28 May 2003 referred to this subject. Perhaps you could indicate if more detailed information is required. The Committee also asked if there had been “any discussion at European Union level about the different traditions in different EU countries concerning civil servants having the capacity to exercise political rights”. The degree of freedom of civil servants in other countries to engage in political activity varies considerably from country to country. In most European Union Member States civil servants are afforded more freedom than in this country. A more liberal regime also applies in some of the other “common law” jurisdictions, such as Canada, Australia and New Zealand. However, international practice does not provide reliable guidance in assessing the position in this country as the position in each country reflects the historical experience of that country, the constitutional relationship between legislature and executive and the role of the civil service as perceived by both the politicians and the public at large. As mentioned in the presentation of 28 May 2003, restrictions have traditionally been imposed on Irish civil servants engaging in political activity to, amongst other things, ensure public confidence in the political impartiality of the civil service. Please do not hesitate to contact me if I can be of any further assistance. Yours sincerely, Ken Spratt Personnel and Remuneration Division Guidance Note Rules governing Civil Servants and Political Activity The rules governing civil servants and politics fall into two categories: •restrictions on standing for election to political office and •rules regarding the maintenance of political impartiality. Restrictions on standing at elections Article 18.2 of Bunreacht na hÉireann states: “A person to be eligible for membership of Seanad Éireann must be eligible to become a member of Dáil Éireann.” Section 41(h) of the Electoral Act 1992 states: “A person who....is a civil servant who is not by the terms of his employment expressly permitted to be a member of the Dáil, shall not be eligible for election as a member .... of the Dáil.” Accordingly, no civil servant, whether temporary or permanent, is eligible for election to the Dáil or membership of the Seanad. Restrictions on civil servants standing for EU, general and local elections are also set out in circular 23 of 1925, a Government decision announced on 6 March 1974 and circular 7 of 1999. The net effect of the circulars and the Government decision provides for the following: (a)Civil servants are not permitted to stand for election to either House of the Oireachtas or to the European Assembly. This restriction applies to all categories of staff. (b)Civil servants in the industrial and in the manipulative, sub-clerical and manual grades are free to engage in political activity, subject to the general restriction in relation to parliamentary elections. Civil servants in this category may, therefore, contest local elections. (c)Members of the clerical grades in the civil service and civil servants in non-manipulative grades with salary maxima equal to or below the clerical officer maximum may apply for permission to engage in politics on the same basis as the staff referred to at (b) but officers employed on particular types of work may have their applications refused. (d)All civil servants above clerical officer level are totally debarred from engaging in politics. Under circular 7 of 1999 and a Government decision of 26 July 2002 all Ministerial and Attorney General Private Office staff holding temporary unestablished positions and whose tenure is coterminous with that of the relevant Minister/Attorney General (e.g. personal assistants, special advisers, personal secretaries in offices of Ministers and civilian drivers of Ministers of State) are exempt from the present arrangements covering civil servants and politics. This means that they can be members of political parties, contribute to political debate, campaign during local, national and European elections and referenda, and stand for local election. Rules regarding political impartiality The requirements in this area are contained in circular 21 of 1932. That circular lays down three specific provisions 1.An official shall not be a member of an Association or serve on a Committee having for its object the promotion of the interests of a political party or the promotion or prevention of the return of a particular candidate to the Dáil. 2.An official shall not support or oppose any particular candidate or party either by public speaking or writing. 3.An official shall not make any verbal statements in public (or which are liable to be published), and shall not contribute to newspapers or other publications any letters or articles, conveying information, comment or criticism on any matter of current political interest, or which concerns the political action or position of the Government or of any member or group of members of the Oireachtas. The civil servants mentioned in category (d) above may not engage in public debates (e.g. letter writing to newspapers, contributions to television or radio programmes etc.) on issues of a political nature, except when required to do so as part of their official duties. Civil servants in category (c) may do so only with the prior permission of their department. These rules do not preclude publications by civil servants of material on public affairs (e.g. text books) where the necessary prior approval of the Head of the Department has been obtained. Circular 21/32 makes it clear that breaches of these rules will attract disciplinary action.
A Dhuine Uasail, I am directed by the Minister for Finance to call attention to the fact that under Sections 51 and 57 of the Electoral Act, 1923, (No. 12 of 1923) “a person either temporarily or permanently in the Civil Service of Saorstat Eireann unless he is by the terms of his employment expressly permitted to be a member” is incapable of being elected or sitting as a member of the Dail or Seanad. 2. The question of the eligibility of Civil Servants for election to membership of Local Authorities has recently been under consideration, and I am now to inform you that it has been decided that no Civil Servant, permanent, temporary, or part time, is in future to be permitted to become a candidate for, or to serve on, a County Council, County or other Borough Council, Urban District Council, Rural District Council, Board of Guardians, Town Commissioners, or other Local Authority. 3. The Minister directs me to state that in accordance with these authorities any person in the Civil Service of the State seeking a seat in the Oireachtas or on a Local Council shall, when his intention to become a candidate is formed, immediately notify the Head of his Department there of and shall resign his office so soon as he issued his address to the electors, or accepts nomination, or in any other manner announces himself, or causes himself to be announced, as a candidate for election. 4. In the case of any member of the Civil Service who through not having received a notification of the official intention in the matter, has already accepted membership of a local body as the result of elections held in the past, the prohibition in this Circular will not apply, and such membership may continue on the understanding, however, that it is conveyed in writing to any person in your Department concerned, that this concession does not imply permission to take part in any matter in which political issues are involved and, of course, applies only to his present membership and not to any future election. 5. I am to request that the contents of this Circular generally should be conveyed to all staffs serving in your Department from time to time for their information and guidance. Mise le meas H.P. Boland
A Chara, I am directed by the Minister for Finance to state that he considers it desirable to convey to the Civil Service instructions is to the proper attitude of individual Civil Servants in regards to matters political. The Minister is aware that it is the view of the civil Service itself that the action of an official who identifies himself actively or publicly with political matters is indefensible, and that such conduct is detrimental to the interests of the Service as a whole. The nature and conditions of a Civil Servant’s employment should, of themselves, suggest to him that he must maintain a reserve in political matters; and not put himself forward on one side or another and, further, that he should be careful to do nothing that would give colour to any suggestions that his official actions are in any way influenced, or capable of being influenced, by party motives. That is the attitude the Minister while not wishing in any way to interfere with or influence political views privately held, expects Civil Servants at all times to observe. Should any departure from official impartiality occur it will be followed by disciplinary action. If the Head of the Department (after such consultation as he may think fit with his Minister) takes the view that the official has overstepped the bounds of propriety, he should send for him, point out to him the gravity of his fault, and obtain from him an undertaking that there will be no recurrence of similar impropriety in the future. If more severe action is called for, its severity will be related to the time and place, the standing of the official concerned, and the degree of publicity, but the Minister will look to Heads of Departments to ensure that, where punishment is deserved, it will follow. While the Minister appreciates that it would not be feasible to anticipate every occasion of the kind in question that might arise for consideration, he desires to lay down specific directions on the following points, namely, 1. An official shall not be a member of an Association or serve on a Committee having for its object the promotion of the interest of a political party or the promotion or prevention of the return of a particular candidate to the Dáil. 2. An official shall not support or oppose any particular candidate or party either by public speaking or writing. 3. An official shall not make any verbal statements in public (or which are liable to be published), and shall not contribute to newspapers or other publications any letters or articles, conveying information, comment or criticism on any matter of current political interest, or which concerns the political action or positions of the Government or of any member or group of members of the Oireachtas. It will be understood that the views of the Minister and his directions conveyed in the Circular apply to the action or an official whether taken by himself alone or in association with others. I am to request that all officials serving in or in future appointed to your Department shall be given the opportunity of noting the contents of this Circular and that its receipt in your Department shall be acknowledged. Mise le meas H.P. Boland
A Dhuine Uasail 1. I am directed by the Minister for Finance to refer to a recent Government decision to amend the rules governing civil servants as candidates at local elections. This Circular sets out the revised rules governing civil servants as candidates at local elections. This Circular amends and supersedes Circular 22/74. The position as regards the candidature of civil servants for election to local authorities is as follows:- (i) State industrial employees and civil servants in manipulative, sub-clerical and manual grades may stand for election to local authorities; (ii) civil servants of the clerical classes and of non-manipulative and sub-professional classes in similar salary ranges may stand as candidates at local elections subject to the condition that the Minister for Finance may, on the recommendation of the Minister in charge of a particular Department, declare that officers engaged in a particular category of work may not so stand; (iii) all other civil servants remain completely barred from standing for election. However, this rule shall not apply to a civil servant who holds a position which after 17 May 1974 has been upgraded through the general restructuring of his or her grade and as a result of which such upgraded position carries a salary maximum above that of clerical officer. 2. The above rules do not apply to personal assistants and special advisers in Minister’s offices. 3. Please bring this Circular to the attention of all officers serving in your Department/Office. Mise Ie meas J. McGovern Assistant Secretary To/All Departments etc. S.I. No. 57 of 1996. ETHICS IN PUBLIC OFFICE (DESIGNATED POSITIONS IN PUBLIC BODIES) REGULATIONS, 1996.I, RUAIRÍ QUINN, Minister for Finance, in exercise of the powers conferred on me by section 3 of the Ethics in Public Office Act, 1995 (No. 22 of 1995), and after consultation with such other Ministers of the Government as I consider appropriate, hereby make the following Regulations: 1. These Regulations may be cited as the Ethics in Public Office (Designated Positions in Public Bodies) Regulations, 1996. 2. In these Regulations— “the Act” means the Ethics in Public Office Act, 1995 (No. 22 of 1995); “position” means position of employment. 3. The following positions are hereby prescribed for the purposes of the definition of “designated position” in section 2 of the Act: (a)A position as a principal (general service grade), and a position in respect of which the maximum salary is not less than that of a principal (general service grade), in any public body specified in subparagraphs (1) to (7) of the First Schedule to the Act, and (b)a position as an officer specified in the Schedule to these Regulations in the public body or part of the public body so specified in relation to the position. 4. The amount of the maximum salary (standard scale) of a higher executive officer in the Civil Service (within the meaning of the Civil Service Regulation Act, 1956 (No. 46 of 1956)) is hereby prescribed for the purposes of section 19 (3) (a) of the Act. 5.(a) The reference in section 14 (3) (b) of the Act to an officer shall be construed as a reference to an office holder. (b)The references in section 20 (1) of the Act to the date of the passing of the Act shall, in so far as that provision relates to the first statement furnished by a person under section 17 (1) (a) or 18 (2) (a) of the Act (other than such a statement so furnished in the year 1996), be construed as a reference to the date on which the directorship or position referred to in that provision was prescribed under section 3 of the Act. (c)The reference in section 24 (2) of the Act to a contravention of Part II of the Act shall be construed as a reference to the commission of an offence related to that part. SCHEDULEOffice of the Houses of the Oireachtas Finance Officer. Information Technology Manager. Superintendent of the Houses of the Oireachtas. Librarian. Public Relations Officer. Restaurant Manager. Bar Manager. Department of Agriculture, Food and Forestry Irish Statue Book 1922 - 1998 © Irish Government 1999 Assistant Principals, Higher Executive Officers and Research Officers in the Personnel Division, Information Systems Division, Agricultural Structures Divisions, Intervention Operations, ERAD Division, Veterinary Division, Milk Policy Division and Veterinary Research laboratories engaged in recommending or approving contracts or in the processing of tenders. The office of Chief Technologist. Office of the Attorney General Fourth Legal Assistants. Assistant Principal (systems and services manager). Assistant Principal (office manager). Parliamentary Draftsman’s Office Senior Draftsmen. Chief State Solicitor’s Office Establishment Officer. Central Statistics Office Assistant Principal, Office Service Unit, Cork. Higher Executive Officer, Office Service Unit, Cork. Assistant Principals/Analysts, Information Technology (Development), Cork. Assistant Principal/Analyst, Information Technology (Development), Dublin. Statistician, Information Technology (Operations), Cork. Higher Executive Officer, Information Technology (Operations), Cork. Higher Executive Officer, Information Technology (Operations), Dublin. Assistant Principal, Training and Development, Cork. Assistant Principal, Information Section, Cork. Higher Executive Officer, Information Section, Cork. Assistant Principal, Census Support, Dublin. Higher Executive Officer, Census Support, Dublin. Assistant Principal, Administration, Dublin. Department of Defence Assistant Principal (Assistant Contracts Manager), Contracts Branch. Higher Executive Officer, Contracts Branch. Executive Officer, Contracts Branch. Senior Technical Assistant, Contracts Branch. Assistant Principal, Information Technology Manager, (Dublin). Assistant Principal, Information Technology Manager, (Galway). Higher Executive Officer, Operations Manager, (Dublin). Higher Executive Officer, Operations Manager, (Galway). Office of the Director of Public Prosecutions Fourth Legal Assistants. Higher Executive Officer (Office Manager). Department of Education Assistant Principals with responsibility for the procurement of information technology equipment, Information Technology Unit. Higher Executive Officers with responsibility for the procurement of information technology equipment, Information Technology Unit (Operations Section). Assistant Principal in Sports Section (Grants) with responsibility for the assessment and allocation of grants to sports bodies. Higher Executive Officers in Sports Section (Grants) with responsibility for the assessment and allocation of grants to sports bodies. Higher Executive Officer in Examinations Branch (Contracts) with responsibility for booking Examination Halls and making payments. Assistant Principals with responsibility for the procurement of furniture and equipment, Personnel Area. Higher Executive Officers with responsibility for the procurement of furniture and equipment, Personnel Area. Assistant Principals with responsibility for the procurement of furniture and equipment, Organisation Unit. Higher Executive Officers with responsibility for the procurement of furniture and equipment, Organisation Unit. Senior Inspector in building/planning unit with responsibility for the procurement of furniture and equipment. Assistant Principal, Third Level Building Programme. Department of Enterprise and Employment Manager, Companies Registration Office. Manager, Information Technology Unit. Secretary of the Sligo County Development Team in that person’s capacity as Chief Executive Officer, Sligo County Enterprise Board. Secretary of the Roscommon County Development Team in that person’s capacity as Chief Executive Officer, Roscommon County Enterprise Board. Secretary of the Mayo County Development Team in that person’s capacity as Chief Executive Officer, Mayo County Enterprise Board. Secretary of the Monaghan County Development Team in that person’s capacity as Chief Executive Officer, Monaghan County Enterprise Board. Secretary of the Cork County Development Team in that person’s capacity as Chief Executive Officer, Cork County Enterprise Board. Secretary of the Galway County Development Team in that person’s capacity as Chief Executive Officer, Galway County Enterprise Board. Secretary of the Kerry County Development Team in that person’s capacity as Chief Executive Officer, Kerry County Enterprise Board. Secretary of the Cavan County Development Team in that person’s capacity as Chief Executive Officer, Cavan County Enterprise Board. Secretary of the Leitrim County Development Team in that person’s capacity as Chief Executive Officer, Leitrim County Enterprise Board. Department of the Environment Assistant Principal, Organisation Unit. Assistant Principals, Information Technology Unit. Assistant Principal, Personnel, dealing with accommodation. Department of Equality and Law Reform Assistant Principal, Legal Aid Board, with responsibility for purchasing and property management. Department of Finance Public Expenditure Division Assistant Principal (Public Procurement Section). Higher Executive Officer, (Secretary to Government Contracts Committee). Budget and Economic Division Assistant Principals (International Financial Services Centre Section). Inspector of Taxes (Higher Grade) (international Financial Services Centre Section). Assistant Principal (Corporation Tax Section). Assistant Principal (Urban Renewal and Seaside Resorts Designation). Administrative Officer (Urban Renewal and Seaside Resorts Designation). Assistant Principal (BES/Seed Capital Schemes and donations to the arts). Finance Division Assistant Principal (EU Section — INTERREG & Special Peace Programmes). Organisation Management and Training Division Assistant Principals (Administrative Vote Control). Administrative Officers (Administrative Vote Control). Assistant Principal (Internal Audit Unit). Higher Executive Officer (Internal Audit Unit). OMT Division — Centre for Management and Organisation Development Assistant Principal (Information Technology Expenditure Control). Higher Executive Officer (Information Technology Expenditure Control). Assistant Principal (LAN Management Support Unit). Higher Executive Officers (LAN Management Support Unit). Assistant Principal (GTN Unit). Higher Executive Officers (GTN Unit). Assistant Principals (Interdepartmental System). Corporate Services Division Assistant Principals, Information Technology Unit. Assistant Principal, Personnel Unit. Higher Executive Officer (Accommodation and Services), Personnel Unit. Department of Health Assistant Principal, General Section. Assistant Principal, Health Promotion Unit. Assistant Principals, Systems Unit. Higher Executive Officer, General Section. Chief Education Officer. General Practitioner Medical Advisor. Department of Justice The Land Registry and Registry of Deeds Chief Superintendent of Mapping with authority to purchase, Mapping Division. Assistant Principal with authority to purchase, Information Technology Division. Higher Executive Officer with authority to purchase, Information Technology Division. Higher Executive Officer with authority to purchase, Personnel Division. Department of Justice, Head Office Assistant Principals with authority to purchase, Information Technology Division. Higher Executive Officer with authority to purchase, Information Technology Division. Assistant Principal with authority to purchase, Organisation Division. Higher Executive Officer with authority to purchase, Organisation Division. Executive Officers with authority to purchase, Organisation Division. Assistant Principals with authority to purchase, Courts Division. Higher Executive Officers with authority to purchase, Courts Division. Executive Officers with authority to purchase, Courts Division. Government Inspector of Explosives, Crime Division. Assistant Principals with authority to purchase, Prisons Division. Higher Executive Officer with authority to purchase, Prisons Division. Pharmacist, Prisons Division. Co-ordinator of work/training, Prisons Division. Film Censor, Film Censor’s Office. Deputy Film Censor, Film Censor’s Office. Assistant Principal with responsibility for the administration of the investment-based naturalisation. scheme. Prisons and Places of Detention Governors. Department of the Marine Assistant Principals in Accounts Branch and Services Section/Information Technology Unit. Engineers — Grade I. Engineers — Grade II. Engineers — Grade III. Chief Engineer (Irish Marine Emergency Service). Chief of Operations (Irish Marine Emergency Service). Surveyors (within the meaning of the Merchant Shipping Acts, 1894 to 1993). Ships Surveyors. Engineering Surveyors. Nautical Surveyors. Marine Radio Surveyors. Senior Sea Fishery Officers. Sea Fishery Officers. Inspectors of Fisheries. Office of the Ombudsman Head of Administration. Office of Public Works Chief Inspector of Stores. Chief Technical Officer. Assistant Chief Technical Officer. Superintendent, Furniture Branch. Valuer Grade I. Valuer Grade II. Valuer Grade III. Organisation Officer. Office of the Revenue Commissioners Assistant Principals, Accommodation Branch, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Assistant Principals, Training Sections, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Assistant Principals, Press/Public Relations/Advertising, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Assistant Principals, Information Technology, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Assistant Principals, Supply functions throughout the Office, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Higher Executive Officers, Accommodation Branch, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Higher Executive Officers, Training Sections, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Higher Executive Officers, Press/Public Relations/Advertising, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Higher Executive Officers, Information Technology, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Higher Executive Officers, Supply functions throughout the Office, who have responsibility in relation to contracts for the purchase of goods and services and/or approving payments for goods and services. Department of Social Welfare Information Technology Division Assistant Principals, including Assistant Principals with responsibilities in relation to Information Technology in Records Branch. Records Assistant Principal with responsibility for contracts for Social Services cards. Higher Executive Officer with responsibility for contracts for Social Services cards. Information Technology Administration Higher Executive Officer. Information Section Assistant Principal. International Operations Assistant Principal with responsibilities in relation to foreign consultancy contracts. Higher Executive Officer with responsibilities in relation to foreign consultancy contracts. Organisation Unit Executive Officers, Higher Executive Officers and Assistant Principals who have responsibilities in relation to contracts for the purchase of goods and services. Staff Development Unit Assistant Principal. Social Welfare Services Assistant Principal with responsibilities in relation to contracts/dealings with private bus operators, Coras Iompair Éireann and other transport companies, Telecom Éireann, An Post, the Electricity Supply Board and Bord Gáis. Assistant Principal with responsibility for negotiation of contracts with various bodies, companies and service providers. Assistant Principal with responsibility for contracts in relation to production of pensions, Child Benefit and other benefit and assistance books. Department of Tourism and Trade Tourism Division Assistant Principals who are members of Agency Management Boards for the implementation of the EU Tourism Operational Programme. Trade Division Assistant Principal who is Head of Export Licensing Unit. Assistant Principal who is a member of Grants Committee of An Bord Tráchtála. Assistant Principal who is Head of Underwriting Unit of Export Credit Section. Assistant Principal who is Head of Claims/Recoveries Unit of Export Credit Section. Personnel Unit Purchasing Officer (Assistant Principal). Information Technology Unit Assistant Principal in charge and Higher Executive Officer. Department of Transport, Energy and Communications Assistant Principal, Personnel Unit. Assistant Principal, Information Technology Unit. Senior Meteorologist/Head of the Information Technology Division. Senior Meteorologist/Head of Instrumentation and Environmental Division. Senior Meteorologist/Head of Commercial Division. Special Adviser to the Secretary.
Code of Practice for the Governance of State bodiesPrefaceIn March 1992, a set of guidelines entitled “State bodies Guidelines” was issued by the Department of Finance. This document updates and expands those guidelines and takes into account, where appropriate, recommendations made in subsequent reports and publications. It sets out principles of corporate governance which State bodies are required to adopt. It should be noted that: i)any reference contained in this Code of Practice, whether a reference to any enactment or otherwise, should be construed as a reference to such provision as amended, adapted or extended from time to time; ii)where legislation applying to a State body contains provisions governing matters the subject of this Code of Practice, such matters will continue to be governed by the relevant legislation; and iii)the provisions contained in this Code of Practice, including the financial thresholds, may be amended from time to time by the Minister for Finance, having consulted with relevant Ministers. The Minister for Finance may also issue circulars and/or guidance notes, from time to time, in relation to the Code of Practice. Department of FinanceCode of Practice for the Governance of State bodies
Introduction1.1Corporate governance comprises the systems and procedures by which enterprises are directed and controlled. In the interests of transparency and accountability, it is important that corporate governance of State bodies should operate to the highest standards applicable in the business world generally. This Code of Practice sets out, at Appendix A, a corporate governance best practice framework which the Government wishes to have put in place in the State body sector. State bodies, including the subsidiaries of such bodies, are required in the conduct of their operations to adopt this Code of Practice and, in accordance with paragraph 10.2, to confirm to the relevant Minister that this has been done. These procedures relate both to internal practices and external relations with the Government, the relevant Minister, the Minister for Finance and their Departments. The requirements of this Code of Practice are supplementary to and do not affect existing statutory requirements and other obligations imposed by the Companies Acts, the specific statutory provisions relating to the State body itself and any other relevant legislation (including equality legislation). The Secretary to the relevant State body has an obligation to ensure that the Directors of that body are informed as to their legal responsibilities and that they are familiar with the requirements of company law and such other statutory provisions which have relevance for them in the exercise of their functions as Directors. 1.2It is not feasible to have a code of practice which will specifically provide for all situations which may arise. Directors and employees of State bodies and their subsidiaries should bear in mind, therefore, that it is primarily their responsibility to ensure that all of their activities, whether covered specifically or otherwise in this document, are governed by the ethical and other considerations implicit in it. 1.3While the Code of Practice applies to both commercial and non-commercial State bodies, it is recognised that difficulties may arise in a given situation. In this regard non-commercial State bodies may find that some aspects of the Code of Practice are not “appropriate” or fully “relevant” to their circumstances. In such a situation, the application of a provision of the Code of Practice may, with the consent of the relevant Minister, following consultation with the Minister for Finance, be waived. Also certain commercial State bodies or their subsidiaries who are involved in strategic alliances, joint ventures or other shareholding arrangements may be of the view that certain aspects of this Code of Practice are not appropriate where a shareholder other than the State is involved. In such circumstances, the relevant Minister should be consulted and, with the consent of the Minister for Finance, that Minister may waive any requirement of this Code of Practice he/she considers inappropriate. If a State body is in any doubt as to whether the Code of Practice is directed at such body, it should seek clarification on the matter from the relevant Department. 1.4Subject to the provisions of paragraph 1.3, each State body should comply with the provisions contained in this Code of Practice and any updates of same. Codes of Conduct2.1All State bodies should have written Codes of Business Conduct for Directors and Employees. Typical components of such a code are listed in Appendix B to this document. The requirements of the Companies Acts which relate to the behaviour of Directors should be implemented in the case of those State bodies which are statutory boards, even where their legislation does not reflect these requirements. The code for employees, a copy of which should be given to every employee, should embrace such matters as duty to the State body, avoidance of conflict of interest, limits on outside activities, acceptance of gifts and honesty in dealings. The up to date codes of business conduct should be available upon request with a copy of each such code being accessible through the State body’s web site (where relevant). 2.2As part of the report to be furnished in accordance with paragraph 10.2, the Chairperson of the Board should affirm to the relevant Minister that Codes of Business Conduct for Directors and Employees have been put in place and complied with by the State body. 2.3In addition to the requirements of the Companies Acts, and, where relevant, their own governing legislation, each member of the Board of a State body and each person holding a designated position of employment with a State body should ensure his/her compliance with relevant provisions of the Ethics in Public Office Act, 1995.1 2.4To the extent commercially feasible, commercial State bodies should promote the standards of service and the initiatives outlined in the “Principles of Quality Customer Service for Customers and Clients of the Public Service” which was originally launched in 1997 and was revised in 2000. A copy of these Principles is reproduced at Appendix C. 2.5The requirements specified in this document should be applied in all trading subsidiaries of the State bodies. Chairpersons of all subsidiaries should formally report to the main Board in a similar manner as the main Board Chairperson reports to the relevant Minister. This report should be received prior to the main Board Chairperson reporting to the relevant Minister. Internal Audit3.Each State body is required to have a properly constituted internal audit function or to engage appropriate external expertise which should operate in accordance with the Framework Code of Best Practice set out in Appendix A. Procurement4.1Competitive tendering should be normal procedure in the procurement process of State bodies. It is the specific responsibility of the Board to ensure that this procedure is implemented and that it is fully conversant with the current value thresholds for the application of procurement rules. The detailed procurement procedures, as set out in the Public Procurement Booklet (1994), in respect of competitive tendering should be applied. It is stressed that, in addition to the national guidelines, the relevant EU Directives, which have the force of law in this and all Member States, should be complied with. It is the responsibility of the Board and management to ensure such compliance. The Chairperson should, in the annual report to the relevant Minister (see paragraph 10.2), affirm compliance with the procurement procedures outlined above. 4.2 Importance of procurement functionThe management, and ultimately the Board, should ensure that there is a strong focus on the role and expertise of the procurement function and that purchasing personnel are properly conversant with all developments in this area. 4.3 Tax Clearance ProceduresAll State bodies must ensure that the Tax Clearance requirements set out in Department of Finance Circular of 30 July 1991 (F 49/13/87), as regards the payment of grants, subsidies and similar type payments, and Department of Finance Circular 22/95, as regards Public Sector Contracts, are fully adhered to. Disposal of Assets and Access to Assets by Third Parties5.1It should be standard practice that the disposal of assets of State bodies or the granting of access to property or infrastructure for commercial arrangements e.g. joint ventures with third parties, with an anticipated value at or above a threshold level of €70,000, should be by auction or competitive tendering process, other than in exceptional circumstances (such as a sale to a charitable body). The method used should be both transparent and likely to achieve a fair market-related price. The anticipated value may be determined either by a reserve price recorded in advance in the State body’s records or by a formal certification by the Director of the body with responsibility for financial matters or, alternatively, a Director who is also a member of the Board Audit Committee, that, in his or her view, the anticipated value is likely to be less or greater than €70,000. In determining market value, regard should be had to accounting standards best practice in Ireland. 5.2If an auction or competitive tendering process takes place and the highest bid is not accepted, then specific Board approval is required before the disposal of the asset or granting of access to property or infrastructure for commercial arrangements with third parties can be completed. For reasons of transparency, such approval together with the reason why a lower bid was permitted to be accepted should be noted in the minutes of the Board. 5.3If an auction or competitive tendering process does not take place and the agreed price is €70,000 or more, then specific Board approval is required before negotiations start and also before the disposal of the asset or granting of access to property or infrastructure for commercial joint venture arrangements with third parties can be completed. 5.4No disposal of an asset or grant of access to property or infrastructure for commercial arrangements with third parties should be completed until the officer authorising the disposal or grant of access has certified formally that (i) Board approval is not necessary, with the reasons therefor, or (ii) Board approval, where necessary, has been obtained. 5.5Disposal of assets to Directors, employees or their families or connected persons,2 should, as with all disposals, be at a fair market-related price. A record of all such disposals to such persons (to include details of the asset disposed of, price paid and name of the buyer) should be noted in a register kept for this purpose (minor disposals below a threshold approved by the Board may be omitted from the register). This register should be available for inspection, if requested, by the Board or by any Director. The Board may retain a requirement that any disposal above an approved threshold may not be made without having been formally endorsed by the Board which may impose specific restrictions with regard to any such disposal. 5.6Details of all disposals of assets or grants of access to property or infrastructure for commercial arrangements with third parties (save for connected third parties which is dealt with in paragraph 5.5) below the threshold value of €70,000 without auction or competitive tendering process should be formally reported, with the paid price and the name of the buyer to the Board on an annual basis. 5.7Details of and explanations for the disposals of assets or grants of access to property or infrastructure for commercial arrangements with third parties above the threshold of €70,000 which have not been subject to auction or competitive tendering process should be included in the Chairperson’s annual report to the relevant Minister (see paragraph 10.2). 5.8The Chairperson, in the annual report to the relevant Minister (see paragraph 10.2), should affirm that the disposal procedures, as outlined above, have been complied with. Establishment of Subsidiaries and Acquisitions by State bodies6.1The establishment or acquisition of subsidiaries, participation in joint ventures and the acquisition of shares by any State body, by its subsidiaries or by joint ventures in which either a State body or its subsidiaries participate (“State body joint ventures”) is subject to the legal capacity to do so and to the prior written approval of the relevant Minister, given with the consent of the Minister for Finance. Any offer to acquire shares made by a State body, its subsidiaries or State body joint ventures must refer expressly to such legal capacity and to such approval requirements. 6.2When seeking such approval, State bodies should supply their relevant Department with complete details of such proposed subsidiaries, joint ventures or acquisitions. Such details should include, together with such other information requested: •the full business case for the proposal; •the amount of share capital proposed to be acquired compared with the entire issued share capital of the company concerned; •details of any shares held in such company by any other State body, its subsidiaries or State body joint ventures; •data on the financial commitment and exposure of the parent body, whether by way of equity, loans, guarantee or otherwise; •outstanding borrowings of such company from all sources, whether guaranteed or not, and any commitments by them which could involve financial exposure for a State body; and •in seeking approval for the establishment or acquisition of subsidiaries, the proposed approach to the remuneration and conditions of employment of the Chief Executive/Managing Director and, where appropriate, other employees of the subsidiaries should be outlined. 6.3Where State bodies, their subsidiaries and/or any State body joint ventures have a combined holding in any company exceeding 30% of the entire issued share capital of such company, the State bodies concerned should notify the relevant Minister and the Minister for Finance of such shareholdings. 6.4Where a State body is subject to a limit on its borrowings, the combined borrowings of both the parent body and all its subsidiaries (the “Group”) are covered by that limit. Cash balances are not to be taken into account in calculating borrowings for the purposes of borrowing limits. State guarantees cannot be given without explicit statutory authority and may be given only by the Minister for Finance or with his consent. State guarantees may also be subject to approval by the EU Commission under the Treaty rules on State Aid. As a general rule, current policy is not to issue new State guarantees and to allow outstanding guarantees to expire as the relevant borrowings are repaid. Diversification7.A State body should obtain the approval of the relevant Minister for any intended action which would extend or change significantly the nature, scope or scale of the activities in which it (or any subsidiary or State body joint venture) engages. The financial consequences of such actions, and their consistency with the existing remit of the body (if any), notably its statutory remit, should be set out. The consent of the Minister for Finance should be obtained to any action which, in the view of the relevant Minister, would have significant financial consequences, notably on the debt, profitability or ability of the body to pay dividends (where relevant). Investment Appraisal8.Guidelines for the Appraisal and Management of Capital Expenditure Proposals were issued by the Department of Finance in July 1994. These procedures apply to State bodies as well as to Departmental investments and should be adhered to. The Chairperson of each State body should confirm that these Guidelines are being complied with. Remuneration and Directors’ Fees9.1RemunerationChairpersons and Boards of all State bodies are reminded that they are required to implement Government policy in relation to the remuneration of the Chief Executive/Managing Director and that the arrangements authorised from time to time cover total remuneration. Arrangements put in place by a relevant Department or the Department of Finance for determining and approving the remuneration of the Chief Executive/Managing Director must also be implemented and adhered to. Chief Executives of commercial State bodiesIn particular, following Government consideration of Report No. 37 of the Review Body on Higher Remuneration in the public sector (the “Review Body Report”) and of the Hay Management Consultants’ Report on the remuneration of Chief Executives of commercial State bodies, the following new approach applies to the determination of the remuneration of all new (post July 1999) Chief Executives of commercial State bodies and of all those existing Chief Executives who accept that the terms of the Government decision of 14 July 1999 on the application of the recommendations of the Review Body on Higher Remuneration in the public sector on the nature of contracts, performance-related pay and the publication of remuneration information in annual accounts would also apply to them: (1)performance criteria, consistent with the corporate plans produced pursuant to paragraph 11, for each body should be drawn up by the Board and should reflect the shareholders’ objectives and strategic mandate. The performance-related system should be implemented by a remuneration committee of the Board, which should include a civil servant from the relevant Department, whether he/she is a member of the Board or not, who would represent the relevant Minister’s requirements as shareholder; (2)the remuneration committee should examine the Chief Executive’s performance annually and should submit a report thereon, following approval by the Board, to the relevant Minister each year; (3)the Chief Executive’s remuneration and that of the Chief Executive of any subsidiary should be set out in the company’s annual report which should state (a) the Chief Executive’s annual basic salary, (b) payments made to the Chief Executive under performance-related pay schemes and (c) the total value of the Chief Executive’s superannuation benefits, with a breakdown between standard company superannuation benefits and any additional benefits being provided for the Chief Executive (i.e. any other arrangements made of financial benefit to the Chief Executive). This information should be subject to the company’s annual audit; (4)revised contractual arrangements should be introduced and operated in accordance with the principles set out in paragraphs 2.18 to 2.22 of the Review Body Report. All contracts require the approval, before signature, of the relevant Minister and the Minister for Finance; (5)the remuneration of Chief Executives of commercial State bodies will be reviewed periodically by the Minister for Finance using pay consultants as appropriate; (6)the all-in cost to the State body of the total remuneration package of the Chief Executive/Managing Director and the Chief Executive/Managing Director of any subsidiary (with a breakdown of the components) should be included in the Chairperson’s annual report to the relevant Minister; and (7)any changes in the terms and conditions of employment of the Chief Executives (including remuneration) require the prior written approval of the relevant Minister given with the consent of the Minister for Finance. GeneralChairpersons and Boards are also required to implement Government pay policy, as expressed from time to time, in relation to other staff including, as appropriate, the Chief Executive/Managing Director and other staff of any subsidiary. The relevant Department should be consulted in good time on any pay proposals or likely developments which could have significant implications for (i) general Government pay policy (ii) the body’s finances (iii) charges for goods or services provided and/or (iv) other areas of the public sector. Compliance with Government pay policy or with any particular Government decision should not be effected in ways which cut across public service standards of integrity or conduct or involve unacceptable practices which result in a loss of tax revenue to the Exchequer. 9.2Directors’ Fees and Expenses The guidelines covering the payment of fees to the Chairpersons and Directors of State bodies, which were issued by the Minister for Finance in July 1992, as set out in Appendix D, should continue to be observed. The Chairperson of the main Board should affirm, as part of the Chairperson’s annual report to the relevant Minister, that those guidelines are being complied with in respect of such appointees who serve on the main Board and any subsidiaries of State bodies. The Chairperson’s annual report should also include a schedule of the fees and aggregate expenses paid to each of the Directors. Reporting Arrangements10.1Reports and Accounts of State bodies Existing reporting requirements should be adhered to as follows: i)each commercial State body should furnish to the relevant Department and the Department of Finance, not later than the end of the eighth month of the financial year, interim unaudited accounts for the first half of that year; ii)draft unaudited annual accounts3 for each State body should be furnished to its relevant Department and to the Department of Finance not later than two months after the end of the relevant financial year; and iii)the annual report and accounts of each State body should be published (or where publication is not required, submitted to the Government), in the case of commercial State bodies, not later than four months after the end of the relevant financial year and, in the case of non-commercial State bodies, not later than one month following completion of the audit of the accounts of the said body by the Comptroller and Auditor General and six months from the end of that body’s financial year end (whichever is the earlier). In addition to the foregoing, the Chairperson’s statement in the report to the relevant Minister regarding the system of internal financial control (paragraph 10.2(iii)) should be included in the annual report of the State body. This statement should be reviewed by the external auditors to confirm that it reflects the audited body’s compliance with the requirements of paragraph 10.2 and should consider if the statement is inconsistent with the information of which they are aware from their audit work on the financial statements. The external auditors should report their findings accordingly. In cases where fulfilment of the requirements in paragraphs 10.1 (ii) and (iii) would cause unjustifiable difficulties for bodies, the relevant deadline can be extended, as an exceptional measure, subject to the consent of the relevant Minister. 10.2Reporting additional to annual report and accounts The Chairperson of each State body should furnish separately to the relevant Minister, with the annual report and accounts of the body, a comprehensive report covering the Group: i)outlining all commercially significant developments affecting the body in the preceding year, including the establishment of subsidiaries or joint ventures and share acquisitions, and major issues likely to arise in the short to medium term; ii)affirming that all appropriate procedures for financial reporting, internal audit, procurement and assets’ disposals are being carried out; iii)including a statement on the system of internal financial control in the form set out in Appendix E; iv)affirming that Codes of Business Conduct for Directors and Employees have been put in place and adhered to; v)affirming that Government policy on the pay of Chief Executives and all State body employees is being complied with (see paragraph 9.1); vi)affirming that Government guidelines on the payment of Directors’ fees are being complied with; vii)explaining failure to comply with any of the above and stating any corrective action taken or contemplated; viii)outlining significant post balance sheet events; ix)confirming that the Guidelines for the Appraisal and Management of Capital Expenditure Proposals are being complied with; and x)confirming that this Code of Practice has been adopted and is being complied with. Along with the unaudited six-monthly accounts, the Chairperson should also provide an interim report to the relevant Minister on significant commercially sensitive developments in the preceding six months and likely developments for the rest of the year. Strategic and Corporate Planning11.The need for sound corporate planning by State bodies is very important. Each body should, within the first six months of each year, produce annual rolling five-year business and financial plans encompassing strategy (taking account of general sectoral policy), planned investment and appropriate financial targets. Such corporate plans should be approved by the Board and should reflect the shareholders’ objectives and strategic mandate in terms, inter alia, of dividend policy, capital value and, where relevant, economic and social objectives. The plans should set appropriate objectives and goals and relevant indicators and targets against which performance can be clearly measured. This is important in the context of assessing effectiveness and objectively evaluating achievement of targets. A copy of the corporate plans should be sent to the relevant Minister and the Minister for Finance. Tax Compliance12.1State bodies should be exemplary in their compliance with taxation laws and should ensure that all tax liabilities are paid on or before the relevant due dates. In addition to the reporting requirements set out in paragraph 10, a report on the body’s compliance with tax laws should be furnished each year to its relevant Department. The report should confirm that the body has complied with its obligations under tax law. 12.2State bodies, while availing of all legitimate taxation arrangements, should not engage in “offensive” tax avoidance transactions. In broad terms tax avoidance is offensive if it involves the use of the tax code for a purpose other than that intended by the Oireachtas (including an unintended use of a tax incentive) with a view to reducing the amount of tax to be paid by the State body or some other party to a transaction in which the State body participates. Where a doubt arises in a particular instance, the State body concerned should consult the Revenue Commissioners. October 2001 Appendix AFramework Code of Best Practice for Corporate Governance in State bodies1. The Board of Directors•The Board should meet regularly, retain full and effective control over the State body and monitor the executive management and performance. •The Board should have a formal schedule of matters specifically reserved to it for decision to ensure that the direction and control of the body is firmly in its hands (some of these matters may require Ministerial approval and this should be noted). This schedule should include, at least, the following: •significant acquisitions, disposals and retirement of assets of the State body or its subsidiaries. The schedule should specify clear quantitative thresholds for contracts above which their approval is required; •major investments and capital projects, delegated authority levels, treasury policy and risk management policies; •approval of terms of major contracts; •policy on determination of senior management remuneration; •approval of annual budgets and corporate plans; •production of annual reports and accounts; •appointment, remuneration and assessment of the performance of the Chief Executive; and •significant amendments to the pension benefits of the Chief Executive and staff (which may require Ministerial approval). •The collective responsibility and authority of the Board should be safeguarded. Excessive influence on Board decision-making by individual members should be avoided, while allowing Board members the opportunity to fully contribute to Board deliberations. •All Directors should have access to the advice and services of the Secretary of the body who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Any question of the removal of the Secretary should be a matter for the Board as a whole. •The Board should, in a Board resolution, lay down formal procedures whereby Directors, in the furtherance of their duties, may take independent professional advice, if necessary, at the reasonable expense of the State body. Such procedures should also be set out in the code of conduct for Directors. •The non-executive Directors should bring an independent judgement to bear on issues of strategy, performance, resources, key appointments, and standards of conduct. •Any business or other interests, which could affect a Director’s independence, should be dealt with as outlined in section 3. •It is the Board’s duty to ensure that a balanced and understandable assessment of the body’s position is made in presenting its annual report and accounts to the relevant Minister. •The Directors should state in the annual report that they are responsible for preparing the accounts. There should also be a statement by the external auditors about their reporting responsibilities. •The Directors should review annually the effectiveness of the body’s system of internal controls, including financial, operational and compliance controls and risk management. •The Directors should ensure that the Chairperson keeps the relevant Minister advised of matters arising in respect of the State body. •The Directors should report that the business is a going concern with supporting assumptions or qualifications, as necessary. •The Board should be supplied, in a timely fashion, with information which is of a suitable quality to enable Board members to satisfactorily discharge their duties. •The Board is responsible for compliance with all statutory obligations applicable to the State body. Where individual Board members become aware of non-compliance with any such obligation, they should immediately bring this to the attention of their fellow Board members with a view to having the matter rectified. The matter should also be brought to the attention of the relevant Minister by the Chairperson. •The Board has a responsibility to establish procedures for maintaining an appropriate relationship with the external auditors. 2. Briefing for new DirectorsDirectors of State bodies incorporated under the Companies Acts have duties under these Acts and it is the responsibility of each Director to act in conformity with the applicable provisions of those Acts. On appointment of new Directors, the Secretary of the body should provide them with the following information: •a formal schedule of matters reserved to the Board for decision; •procedures for obtaining information on relevant new laws and regulations; • procedures to be followed when, exceptionally, decisions are required between Board meetings; •a schedule detailing the composition of all committees and their terms of reference; •a statement explaining the Director’s responsibilities in relation to the preparation of the accounts, the State body’s system of internal control and audit and for reporting on the business as a going concern with supporting assumptions or qualifications as necessary; •a statement informing the Directors that they have access to the advice and services of the Secretary, who is responsible to the Board for ensuring that Board procedures are followed and the applicable rules and regulations are complied with; •code of ethics/conduct for Directors, including disclosure of Directors’ interests; •specific company information; and •a copy of the most up to date version of the “Code of Practice for the Governance of State bodies” together with any relevant circulars and/or guidance notes. 3. Disclosure of Interests by Directors of State bodiesIn addition to the legal requirements under the Companies Acts and requirements under the Ethics in Public Office Act 1995, the following procedures should be observed: i)On appointment to a Board of a State body, each memeber should furnish to the Secretary of the body details relating to his/her employment and all other business interests including shareholdings, professional relationships etc., which could involve a conflict of interest or could materially influence the member in relation to the performance of his/her functions as a member of the Board. Any interests of a members’ family of which he/she could be expected to be reasonably aware or a person or body connected with the member which could involve a conflict of interest or could materially influence the member in the performance of his/her functions should also be disclosed. For this purpose, persons and bodies connected with a member should include: (a)a spouse, parent, brother, sister, child or step-child; (b)a body corporate with which the member is associated; (c)a person acting as the trustee of any trust, the beneficiaries of which include the member or the persons at (a) above or the body corporate at (b) above; and (d)a person acting as a partner of the member or of any person or body who, by virtue of (a) - (c) above, is connected with the member. Each member should furnish to the Secretary details of business interests on the lines above of which he/she becomes aware during the course of his/her directorship. ii)Where it is relevant in any matter which arises, the member should be required to indicate to the Secretary the employment and any other business interests of all persons connected with him/her, as defined at (i). iii)Boards may exercise discretion regarding the disclosure by members of minor shareholdings. As a general guideline, shareholdings valued at more than €15,000 or of more than 5 per cent of the issued capital of a company should be disclosed. iv)If a member has a doubt as to whether this Code requires the disclosure of an interest of his/her own or of a connected person, that member should consult the Chairperson. v)Details of the above interests should be kept by the Secretary of the body in question in a special confidential register and should be updated on an annual basis. Changes in the interim should be notified to the Secretary as soon as possible. Only the Chairperson, Secretary and Chief Executive of the body should have access to the register. vi)Should a matter relating to the interests of the Chairperson arise, he/she should depute the Deputy Chairperson or another Director to chair the Board meeting and should absent himself/herself when the Board is deliberating or deciding on a matter in which the Chairperson or a person or body connected with the Chairperson has an interest. vii)Board or company documents on any case which relate to any dealings with the above interests should not be made available to the member concerned prior to a decision being taken. (Such documents should be taken to include those relating to cases involving competitors to the above interests). Decisions once taken should be notified to the member. viii)As it is recognised that the interests of a Director and persons connected with him/her can change at short notice, a Director should, in cases where he/she receives documents relating to his/her interests or of those connected with him/her, return the documents to the Secretary at the earliest opportunity. ix)A Director should absent himself/herself when the Board is deliberating or deciding on matters in which that member (other than in his/her capacity as a member of the Board) or a person or body connected with the member has an interest. In such cases a separate record (to which the Director would not have access) should be maintained. x)Where a question arises as to whether or not a case relates to the interests of a Director or a person or body connected with that Director, the Chairperson of the Board should determine the question. xi)Former Directors should treat commercial information received while acting in that capacity as confidential. xii)The procedures set out above should also be adopted in subsidiaries of State bodies. 4. Audit Committee•The Board should establish an Audit Committee of at least three independent non-executive Directors with written terms of reference which deal clearly with its authority and duties. •The Board Audit Committees of the commercial State bodies should only include non-executive Directors. If Chairpersons participate, the Board Audit Committees should be chaired by another Director. •The constitution and terms of reference of the Board Audit Committee and other Board committees should be reviewed by the main Board and updated as appropriate. •The Board Audit Committees of State bodies should meet at least four times a year. •The Board Audit Committee should have explicit authority to investigate any matters within its terms of reference, the resources which it needs to do so and full access to information. The Board Audit Committee should be able to obtain outside professional advice and, if necessary, invite outsiders with relevant experience to attend meetings. •The Board Audit Committee should have a discussion with the external auditors at least once a year, without executive members of the Board or employees of the State body present, to ensure that there are no unresolved issues of concern. 4(a) Internal Audit FunctionThe operation of the internal audit function should comply with the following code: i)the internal audit function should have a formal charter, including terms of reference, which has been approved by the Board (an outline of the charter is set out below); ii)the reporting structure for internal audit should be clear and formally documented. The head of the internal audit function should have considerable seniority within the organisation and the content of all internal audit reports should be entirely at his/her discretion. The head of internal audit should report directly to the Board Audit Committee and should also have access to the Chairperson of the Board and the Chairperson of the Board Audit Committee. Functionally, the head of internal audit should report within the body to such person as the Board decides and to the Chief Executive; iii)in carrying out its ongoing work the internal audit function should include detailed testing on all specific areas covered by the charter in order to ensure that the State body is fully complying with all requirements and report its findings to the Board Audit Committee; iv)the internal audit function should be properly resourced with the necessary skills including the ability to deal with non-financial aspects; v)the internal audit function should liaise frequently with the external auditors so that the potential for co-operation between the two is maximised. The work carried out by these two entities can frequently be complementary and effectiveness can be increased through regular consultation. (For example, the external auditors could offer guidance on particular areas which the internal audit function might be reviewing. Conversely the internal audit function could provide the external auditor with company specific expertise to assist in the evaluation of the systems being examined as part of the statutory audit); vi)the Board Audit Committee should make the external auditors aware of the corporate governance issues outlined in this document with which the State body is required to comply. The Board Audit Committee should periodically consult with the external auditors regarding the operation of the internal audit function with particular reference to the staffing of the function, the audit work programmes being applied and the testing carried out in relation to the body’s compliance with the requirements set out in this document; vii)in planning, executing and reporting its work, the internal audit function should ensure that value-for-money auditing receives adequate attention; and viii)the internal audit function in each State body should review compliance with procurement and disposal procedures as required by the Board Audit Committee, from time to time, and report to the Board Audit Committee. 4(b) Charter for Internal AuditA charter for the internal audit function should include the following: •Board policy statement This should state the Board’s policy to support and develop the internal audit function. •A mission statement This should set out the internal audit function’s contribution to the organisation. •Terms of Reference The terms of reference of the internal audit function should include: -Scope and authority The Board should provide the internal audit function with authority to act on its behalf in carrying out internal audit and there should be no operational areas or levels within the organisation precluded from internal audit review. -Independence, role and responsibilities The internal audit function should serve the best interests of the State body as a whole and carry out its work in a manner that is consistent with the Standards for the Professional Practice of Internal Auditors, published by the Institute of Internal Auditors. In order to demonstrate that due professional care has been taken in performing its work, it is necessary to have comprehensive records of activity showing that the work has been performed in accordance with accepted standards of best practice. In order to ensure objectivity and independence, internal audit staff should be free from all operating responsibility. Where State bodies appoint appropriate external expertise to undertake this function, objectivity and independence should also be assured. Appendix BFramework for a Code of Business ConductIntroductionThis is a suggested framework for a code of business conduct for all Directors and employees of State bodies. The Code should be prepared via a participative approach, and should be approved by the Board, taking into account the implications of the Ethics in Public Office Act, 1995. Such a Code should address the following matters: Intent and scope It should contain a description of nature, intent and scope of application of the Code. Objectives The Code should set out basic objectives such as: •establishment of an agreed set of ethical principles; •promotion and maintenance of confidence and trust; and •prevention of development or acceptance of unethical practices. General Principles It should include a description of fundamental principles, for example: •Integrity •disclosure by Directors of outside employment/business interests in conflict or in potential conflict with the business of the body; •management and employees should not be allowed to be involved in outside employment/business interests in conflict or in potential conflict with the business of the body; •avoidance of the giving or receiving of corporate gifts, hospitality, preferential treatment or benefits which might affect or appear to affect the ability of the donor or the recipient to make independent judgement on business transactions; •commitment to compete vigorously and energetically but also ethically and honestly; •conduct of purchasing activities of goods/services in accordance with best business practice; •ensuring that the body’s accounts/reports accurately reflect their business performance and are not misleading or designed to be misleading; •avoidance of use of the State body’s resources or time for personal gain, for the benefit of persons/organisations unconnected with the body or its activities or for the benefit of competitors; and •commitment not to acquire information or business secrets by improper means. •Information •support by Directors, management and employees of a State body for the provision of access by the body to general information relating to the body’s activities in a way that is open and enhances its accountability to the general public. •respect the confidentiality of sensitive information held by the State body. This would constitute material such as: •commercially sensitive information (including, but not limited to, future plans or details of major organisational or other changes such as restructuring); •personal information; and •information received in confidence by the public body. •observe appropriate prior consultation procedures with third parties where, exceptionally, it is proposed to release sensitive information in the public interest. •comply with relevant statutory provisions (e.g. data protection legislation, the Freedom of Information Act, 1997). •Obligations •fulfil all regulatory and statutory obligations imposed on the State body; •compliance with detailed tendering and purchasing procedures, as well as complying with prescribed levels of authority for sanctioning any relevant expenditure; •introduce controls to prevent fraud including adequate controls to ensure compliance with prescribed procedures in relation to claiming of expenses for business travel; •Directors should use their reasonable endeavours to attend all Board meetings; and •acceptance of positions following employment and/or engagement by a State body can give rise to the potential for conflicts of interest and to confidentiality concerns. The Board of a State body should, therefore, in a manner most effective to such body, deal with the issue of post resignation/retirement employment, appointment and/or consultancy of its Directors and employees by the private sector and should ensure that any procedures that it may have put in place in this regard are monitored and enforced. •Loyalty •acknowledge the responsibility to be loyal to the State body and fully committed in all its business activities while mindful that the organisation itself must at all times take into account the interests of the owner(s); and •acknowledge the duty of all to conform to highest standards of business ethics. •Fairness •compliance with employment equality and equal status legislation; •commitment to fairness in all business dealings; and •value customers and treat all customers equally. •Work/External Environment •place highest priority on promoting and preserving the health and safety of employees; •ensure that community concerns are fully considered; and •minimise any detrimental impact of the operations on the environment. •Responsibility •circulation of this Code of Business Conduct and a policy document on disclosure of interests to all Directors, management and employees for their retention; •above recipients to acknowledge receipt and understanding of same; and •prepare an explanatory booklet providing practical guidance and direction on such areas as gifts and entertainment and on other ethical considerations which arise routinely. •Review •commitment to review the Code of Business Conduct as appropriate. Appendix CPrinciples of Quality Customer Service for Customers and Clients of the Public ServiceIn their dealings with the public, Civil Service Departments and Public Service offices will: Quality Service Standards Publish a statement that outlines the nature and quality of service which customers can expect and display it prominently at the point of service delivery. Equality/Diversity Ensure the rights to equal treatment, established by equality legislation, and accommodate diversity, so as to contribute to equality for the groups covered by the equality legislation (under the grounds of gender, marital status, family status, sexual orientation, religious belief, age, disability, race and membership of the Traveller Community). Identify and work to eliminate barriers to access to services for people experiencing poverty and social exclusion, and for those facing geographic barriers to services. Physical Access Provide clean, accessible public offices that ensure privacy, comply with occupational and safety standards and, as part of this, facilitate access for people with disabilities and others with specific needs. Information Take a proactive approach in providing information that is clear, timely and accurate, is available at all points of contact and meets the requirements of people with specific needs. Ensure that the potential offered by Information Technology is fully availed of and that the information available on Public Service web sites follows the guidelines on web publication. Continue the drive for simplification of rules, regulations, forms, information leaflets and procedures. Timeliness and Courtesy Deliver quality services with courtesy, sensitivity and the minimum delay, fostering a climate of mutual respect between provider and customer. Give contact names in all communications to ensure ease of ongoing transactions. Complaints Maintain a well-publicised, accessible, transparent and simple-to-use system of dealing with complaints about the quality of service provided. Appeals Similarly, maintain a formalised, well-publicised, accessible, transparent and simple-to-use system of appeal/review for customers who are dissatisfied with decisions in relation to services. Consultation and Evaluation Provide a structured approach to meaningful consultation with, and participation by, the customer in relation to the development, delivery and review of services. Ensure meaningful evaluation of service delivery. Choice Provide choice, where feasible, in service delivery including payment methods, location of contact points, opening hours and delivery times. Use available and emerging technologies to ensure maximum access and choice and quality of delivery. Official Languages Equality Provide quality services through Irish and/or bilingually and inform customers of their right to choose to be dealt with through one or other of the official languages. Better Co-ordination Foster a more co-ordinated and integrated approach to delivery of public services. Internal Customer Ensure staff are recognised as internal customers and that they are properly supported and consulted with regard to service delivery issues Appendix DGuidelines on the payment of fees to the Chairpersons and Directors/Members of State bodies1.The Board of the State body will ensure that the fees paid to Chairpersons and Directors will be at the rates authorised by the relevant Minister. 2.The fees paid to the Chairpersons or Directors of any subsidiary or associated body will not exceed the rates applying to the Chairperson or Directors, respectively, of the main body and will, as a general rule, be significantly less. 3.Only one fee will be payable to a person in respect of (a) service on the main Board of a State body and Boards of subsidiary or associated bodies or (b) service on subsidiary or associated Boards only. 4.The Board will adhere strictly to the arrangements recommended by the Review Body on Higher Remuneration in relation to the retention/surrender by the Chief Executive of fees for directorships payable to him/her - the arrangements would, for instance, allow the Chief Executive to retain the fee in respect of membership of his/her own main Board, prohibit retention of any fees paid in respect of subsidiary or associate bodies and, subject to Board approval, allow retention of not more than two fees in respect of other directorships. 5.A staff member, other than the Chief Executive, who becomes a member of the Board of subsidiary or associated body shall be regarded as holding that position ex-officio and shall not, therefore, receive any additional remuneration in respect of it. 6.An executive other than the Chief Executive will, subject to Board approval, be allowed to hold membership of the Boards of bodies which are not subsidiary to or associated with the main body and to retain not more than two fees in respect of such membership. 7.As part of the reporting arrangement put in place under the Code of Practice for the Governance of State bodies, the Chairperson of the main Board will each year submit a report affirming that the above guidelines are being complied with. Appendix EFormat for the Report from the Chairperson regarding the assessment of internal financial controls of a State body as required in paragraph 10.2 (iii)1.Acknowledgment by the Chairperson that the Board is responsible for the body’s system of internal financial control. 2.An explanation that such a system can provide only reasonable and not absolute assurance against material error. 3.Description of the key procedures, which have been put in place by the Board, designed to provide effective internal financial control including: i)the steps taken to ensure an appropriate control environment (such as clearly defined management responsibilities and evidence of reaction to control failures); ii)processes used to identify business risks and to evaluate their financial implications; iii)details of the major information systems in place such as budgets, and means of comparing actual results with budgets during the year); iv)the procedures for addressing the financial implications of major business risks (such as financial instructions and notes of procedures, delegation practices such as authorisation limits, segregation of duties and methods of preventing and detecting fraud); and v)the procedures for monitoring the effectiveness of the internal financial control system which may include: audit committees, management reviews, consultancy, inspection and review studies, the work of internal audit, quality audit reviews and statements from the heads of internal audit. 4.Confirmation that there has been a review of the effectiveness of the system of internal financial control. 5.Information (if appropriate) about the weakness in internal financial control that have resulted in material losses, contingencies or uncertainties which require disclosure in the financial statements or the auditor’s report on the financial statements. 6.The information relating to weakness in internal financial control should be a description of the action taken, or intended to be taken, to correct the weaknesses, or an explanation of why no action is considered necessary. Report of the Committee on Finance and the Public Service on the draft Code of Standards and Behaviour for Civil Servants 1 In brief, the Act requires inter alia that persons in State bodies who hold designated directorships and designated positions of employment must make an annual statement or declaration of those interests (as defined in the Act) which could materially influence them in the performance of their functions and refrain them from exercising such functions in accordance with the Act. The annual statement, which may be updated if interests change, must be made to a designated person within the State body, in accordance with the provisions of the Act, and, in the case of those who hold designated directorships, to the Public Offices Commission established under the Act. The Commission will provide advice and publish mandatory procedures concerning steps to be taken by designated directors and holders of designated positions (among others) to ensure compliance with the Act. Where a person who holds a designated directorship or designated position of employment in a State body is advised by the Commission, or it appears from guidelines published by the Commission that his/her interest or the interest of a connected person should be disclosed, that person must make an appropriate statement to the relevant authority in the State body. 2 see Appendix A, section 3(i). 3 Draft unaudited accounts refer to draft financial statements and notes thereon (in accordance with generally accepted accounting principles) and not management accounts. |
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