Official Report (Hansard)

Review of Management of Arm's-Length Bodies

5 May 2009

Members present for all or part of the proceedings:

Mr Barry McElduff (Chairperson)
Mr David McNarry (Deputy Chairperson)
Mr Dominic Bradley
Mr Francie Brolly
Lord Browne
Mr Raymond McCartney
Mr Nelson McCausland
Mr Pat Ramsey
Mr Ken Robinson
Mr Jim Shannon

Witnesses:

Professor Eamonn McCartan ) Sport Northern Ireland
Mr Dominic Walsh )
Ms Hazel Campbell ) Department of Culture, Arts and Leisure
Mr Paul Sweeney )

The Chairperson (Mr McElduff):

We are joined by Mr Paul Sweeney, the permanent secretary of the Department of Culture, Arts and Leisure (DCAL), Hazel Campbell, acting head of sport at the Department, and Professor Eamonn McCartan and Mr Dominic Walsh from Sport NI.

Mr McNarry:

Do the witnesses intend to make a presentation?

The Chairperson:

Yes; Paul, Eamonn and Dominic will each make a five-minute opening statement. That will be followed by questions from members. I welcome the team.

Mr Paul Sweeney (Department of Culture, Arts and Leisure):

I welcome the opportunity to be of further assistance to the Committee in its ongoing review of the sponsorship role between the Department and its arm’s-length bodies. As you know, on 31 March 2009, we assisted the Committee on a case study regarding the Arts Council, and today, we are looking at Sport Northern Ireland. Members may be interested to know that Sport Northern Ireland was one of the case studies that featured in the report, ‘Good Governance ― Effective Relationships between Departments and their Arm’s Length Bodies’ , which was published in May 2007 by the Northern Ireland Audit Office.

The Sports Council of Northern Ireland, referred to as Sport Northern Ireland, is an executive non-departmental public body (NDPB) that is sponsored by DCAL. It was established in December 1973 under the provisions of the Recreation and Youth Service ( Northern Ireland) Order 1973, and its objective is the furtherance of sport and physical recreation. Its principle functions are provided for under article 3 of the Recreation and Youth Service ( Northern Ireland) Order 1986.

In the current financial year, 2009-2010, Sport Northern Ireland will have a resource allocation of slightly more than £9 million and a capital allocation of around £7·5 million. I place a caveat on my remarks about the capital allocation, because, as members know, the Department and Sport Northern Ireland are in discussions about a potential reallocation of money that would otherwise have been allocated for stadium provision. We are at an advanced stage of discussion with Sport Northern Ireland over the exact amount of money that will be allocated for capital this year.

Over and above that, Sport Northern Ireland is the distributor of approximately £5 million of lottery funding per annum. Sport Northern Ireland is accountable to DCAL for the funding voted to it by the Assembly, but it reports to the Secretary of State for Culture, Media and Sport in relation to the lottery funding.

Sport Northern Ireland and the University of Ulster have formed a joint-venture company, which is known as the Sports Institute for Northern Ireland. The Minister of Culture, Arts and Leisure appoints the board members of Sport Northern Ireland, typically for a period of four years. The board comprises 15 members, and there is currently a vacancy for a vice-chairperson. Members may have noticed that we advertised that post last week. The chief executive, Eamonn McCartan, has been appointed as the accounting officer, and approximately 101 full-time employees and three directors support him.

The primary control framework between the Department and Sport Northern Ireland is the management statement and financial memorandum. Sport Northern Ireland prepares a five-year strategy and an annual business plan, and the Department has a role in approving that strategy and plan.

We have quarterly accountability meetings, which are chaired by my colleague Hazel, who is the grade 5, or assistant secretary. We have monthly finance and budget review meetings with Sport Northern Ireland. Senior colleagues in the Department periodically attend board meetings and audit committee meetings of Sport Northern Ireland, and the Minister will have an annual accountability review with its chairperson. The Comptroller and Auditor General prepares the financial statements for Sport Northern Ireland.

I hope that that sets the broad framework for this afternoon’s discussion.

Mr Dominic Walsh (Sport Northern Ireland):

To aid the Committee, I have selected some key issues as part of my introduction. The board of Sport NI welcomes the opportunity to give a presentation to the Committee as part of its review of the governance, role and operation of Sport NI.

We at Sport NI welcome the constructive reports that were put together by the Chartered Institute of Public Finance and Accountancy (CIPFA). The reports confirmed that the culture of governance and accountability in Sport NI is very strong. The board approaches its responsibilities of stewardship, accountability and leadership with the utmost sense of duty and strives to follow best practice of governance at all times. The board is fully aware of the objectives of Sport NI and the wider Government strategy for sport and physical recreation. The board plays an integral role in steering the organisation at a strategic level. It has a wide and appropriate skills and experience mix, which it uses to very good effect. That is supported by a strong ethos of continued professional development in Sport NI, which has seen members benefit from tailored training sessions provided both externally and in house.

As chairperson, I am tasked with leading the board. I seek to ensure that the board fulfils its responsibilities of scrutiny and oversight and that we prosper under the stewardship of public funds. I have particular responsibility for effective strategic leadership on matters such as formulating the board’s strategy for discharging its statutory duties; encouraging high standards of propriety and promoting the efficient and effective use of staff and other resources throughout the organisation; ensuring that the board, in reaching decisions, takes proper account of guidance provided by the Minister and the Department; and representing the views of the board to the general public. The chairperson’s role is very much one of relationship building. It is my role to ensure that effective relationships, based on trust and mutual respect, are fostered between the board and the executive, the board and its various committees, the board and the Department, and the board and its key stakeholders. The key stakeholders include governing bodies, local government, education, health and, importantly, community groups.

I am fully cognisant of my role and responsibilities. I actively engage with the full board to ensure that it remains effective in acting as a team and that it has full corporate ownership for all decisions that it takes. The board itself cannot do the work of Sport NI. In conjunction with the permanent secretary, we are responsible for the appointment and oversight of officers. The board delegates to its officers the responsibility to manage the business of Sport NI.

It is the chief executive of Sport NI, as the accounting officer, who has responsibility — under the board — for the overall organisation, management and staffing of Sport NI, and for its procedures and financial and other matters. That involves the promotion, by leadership and example, of the values that are embodied in Lord Nolan’s seven principles of public life. The board supports the chief executive in undertaking that responsibility. We are very aware that protection of the public pound is paramount.

The committees assist the board in the execution of its duties. A number of committees have been set up to provide overview and direction on more specific elements of Sport NI’s business. One of the key committees is the audit and risk management committee. The function of that committee, as defined in its terms of reference, is to support the accounting officer by monitoring and reviewing the risk, control and governance processes, which have been established in the organisation, and the associated assurance processes. That is achieved through a process of constructive challenge; not to undermine the actions of the accounting officer or wider Sport NI, but to help them to be fully assured that the most efficient, effective and economic risk, control and governance processes are in place and that the associated assurance processes are optimal.

As well as providing assurance to the accounting officer, the accounting committee is a useful mechanism for filtering information on risk and control to the accounting officer. Through the work that it does, the audit committee will develop a good knowledge of areas of weakness in the organisation and will assess their significance. That will assist the board and the accounting officer in identifying priorities for action.

The board, in all its work, operates in line with governing legislation. In addition, Sport NI stays abreast of best practices, and seeks to ensure that the operations remain current and effective. The board operates in the context of collective responsibility and adherence to the principles of public life to which I referred earlier.

As stated in the CIPFA report, I conduct an appraisal of board members. The purpose of that is to ensure that members contribute to an effective board that delivers the corporate plan of Sport NI. The board is ultimately accountable for the performance of the organisation. The success of Sport NI should be a significant factor to take into account when forming an opinion as to the effectiveness of its board.

Sport NI’s board has benefited greatly from a highly skilled and dedicated chief executive, his executive team and all the staff in Sport NI. Its officers regularly furnish members with timely, accurate and relevant information that serves to ensure that decisions by the board are made in an informed and timely manner. The board must, and does, provide challenge at all times, which ensures a strong culture of openness, transparency and accountability in Sport NI. That culture, which the board has helped to cultivate, is conducive with ensuring the highest standards of public accountability and stewardship. The governance and accountability process is supported on an operational level by regular review and assessment at multi levels by the chief executive.

The board is firmly committed to ensuring the highest levels of integrity and openness. It seeks to do the right things the right way first time, which ensures the continued buy-in of our stakeholders. The board also recognises a greater desire on the part of all our stakeholders to better understand the activities of Sport NI. The chief executive has sought to enhance how Sport NI communicates with its stakeholders, ensuring that we demonstrate, by example, our commitment to openness and transparency. Examples of that include making available our corporate plan, research and policy reports on the website; issuing monthly newsletters to all our stakeholders, and the recent launch of the new Activ8 campaign, which is a nationwide campaign to promote participation in physical literacy for seven to 11-year-olds. We already have 20,000 schoolchildren signed up to that programme.

In short, governance is how management manages the organisation, and the board is firmly committed to the highest standards of governance. How does Sport NI do governance? We do it right. I have the utmost confidence in Sport NI’s governance frameworks, as confirmed by the CIPFA report. I have seen, at first hand, how governance has been firmly embedded in the organisation and how that has manifested itself in an organisation that is making a difference, not only to sport in Northern Ireland, but to the social capital of the Province.

Professor Eamonn McCartan (Sport Northern Ireland):

I am pleased to be here today to discuss the CIPFA report and to outline Sport NI’s work on governance and accountability to the Committee for Culture, Arts and Leisure. I am the organisation’s accounting officer, as delegated by the permanent secretary.

Sport Northern Ireland’s vision is a culture of lifelong enjoyment and success in sport that contributes to a peaceful, fair and prosperous society. That vision is derived from the overall aim that emanates from the Programme for Government and is encapsulated in ‘Sport Matters’, our strategy for sport and recreation 2009-2019. In essence, we have one role in that strategy and are a development agency that is responsible for the development of sport.

Our mission statement is to make sport happen for you. During our lifetimes, all of us at the table will have experienced how sport has uplifted the people of Northern Ireland and provided satisfaction, joy and fun, not only at the high-level end, but at the participation end. Our primary objectives are to encourage participation, to improve performance and to contribute to the social capital of Northern Ireland. Above all, our work with volunteers is a key area that will ensure that we develop volunteers who are the backbone of Northern Ireland sport.

In driving the organisation towards the realisation of that vision, I am responsible for ensuring that Sport NI’s business is conducted in accordance with the law and proper standards. Moreover, I ensure that public money is safeguarded, properly accounted for and used economically, efficiently and effectively. In my role, I have a duty to make arrangements to secure continuous improvement in the exercise of Sport NI’s functions, having regard to a combination of economy, efficiency and effectiveness. In discharging that overall responsibility, I am responsible for ensuring that a robust framework of governance exists that is designed to instil a sound system of internal control that contributes to the achievement of our objectives. The report confirms that, in essence, a sound system of governance is in place.

Sport NI’s governance framework is underpinned by several key elements: compliance with governing legislation and regularity; commitment from our senior management team, which has the skills and competencies; the creation of our corporate plan; the operation of our financial procedures consistent with our management letter; the oversight functions of our audit committee, which meets six times a year; the regular and timely provision of information to the board and others; administrative procedures; whistle-blowing procedures; management procedures and supervision; delegation and accountability; and a commitment to staff development and performance.

In order to do that, we give due consideration to risk management, because although our business is to improve sport, we must do so in compliance with our governance structures. The cornerstone of effective governance is good risk management, which is about addressing risks that impact on the achievement of our objectives and ensuring that we fully realise opportunities to further our objectives and to improve sport in Northern Ireland.

For Sport NI, successful implementation of risk management is not about installing an additional layer on top of our existing business processes. Rather, it is about truly embedding risk management into the consciousness and culture of the organisation and its people.

As an executive, we have a strong relationship with our board. I have a strong relationship with the board as accounting officer, and my colleagues have a strong relationship with the board in their respective roles. In my role as accounting officer, I draw on the board for strategic leadership, support and scrutiny. The board decides Sport NI’s strategy, approves our budgets, takes decisions on policies and programmes, and ensures that we have adequate controls in place to manage risk. It is my job, and that of my executive colleagues, to help the board to make informed decisions. That is done, in part, through the creation of appropriate policies and procedures.

In line with public-sector governing guidance, Sport NI has developed a framework of policies and procedures that ensure, as far as possible, that its officers and members understand their environment and responsibilities and the expected standards of conduct. That is complemented by an ongoing programme of learning and development, which seeks to maintain and develop the knowledge and skills of members and staff. New employees and new members receive induction on key policies and procedures. Our policy and procedural framework, which sets out the organisation’s ethos, contributed to the attainment of Investors in People, ISO 9000, and ‘The Sunday Times’ 100 Best Companies awards.

One of the ways in which we are scrutinised and held to account is through our audit committee and internal audit. Sport NI has an active audit and risk management committee, which exists to provide independent, effective assurance about the adequacy of Sport NI’s governance, risk and control environment. The audit committee is supported in exercising its duties by the internal auditor, who provides independent and objective assurance across the whole range of council activities.

The chairperson of the audit committee also meets the chairpersons of other arm’s-length committees and has attended the DCAL audit committee on invitation. I welcome the external, independent review and see it as an integral component in the development of our governance system. I trust, as a result of today’s Committee meeting, that members will be assured about Sport NI’s effective administration of the funds that are entrusted to it and about the robustness of our core governance structures.

The Chairperson:

I thank each of the presenters.

Mr McNarry:

I remind the Committee that Glentoran Football Club has just won the Irish League and that we normally extend our congratulations on such achievements. Perhaps, that will happen towards the end of the meeting.

Mr Shannon:

We must also congratulate Portadown Football Club.

Mr McNarry:

We will do that, too, just to be consistent.

If things had not gone belly up in the Northern Ireland Events Company, we might not be conducting this review; indeed, I trust that we would not. You are not really under the cosh, because we are trying to tidy things up in light of what went wrong. We are trying to ensure that those things are not going wrong in your organisation and that they do not go wrong ever again. I compliment Dominic and Eamonn for putting across what, in election terms, was a pretty good manifesto.

At how many board meetings last year was finance on the agenda?

Mr Walsh:

Last year, we had six board meetings plus four extraordinary board meetings. Finance was on the agenda at each of the six scheduled meetings. There is a standing agenda within the Sport NI board of directors, and it is not delegated to a subcommittee. We rotate the issues to ensure that one does not always sit at the tail end of a board meeting; I have been involved with boards where that does happen. Finance may be discussed third, first, fourth or whenever, but it is a major topic on the agenda of every scheduled board meeting.

Mr McNarry:

That is good to hear. However, the CIPFA report raised concerns that an organisation the size of Sport NI, which has a budget of more than £30 million, did not and does not have a qualified accountant on the board.

DCAL is responsible for drawing up the specifications for board members, and a new Sport NI board was appointed on 1 January 2008. Given the problems that I alluded to with the Northern Ireland Events Company, which came to the notice of DCAL in September 2007, why did the permanent secretary in DCAL not actively recruit an accountant to the new board in January 2008?

I have another couple of questions that I will ask now, so that you can take them together.

Mr Walsh, you said that you treat the issue of finance seriously. I am glad to hear that; it is very welcome. Who gives financial analysis and guidance to your board? You said that you have a risk management committee. Who chairs that committee, and how is risk assessed? Do you have some sort of system for assessing that? Will you elaborate?

I am sure that you have read the CIPFA report and are mindful of the reasons behind that. Did you learn any immediate lessons from it? Is there anything that we need to put right, particularly at the financial end?

Mr Walsh:

To summarise, you asked about accounting expertise on the board, the quality of the board members, the process of risk management and the issues regarding CIPFA. Splitting those questions up, I will answer the one about the board, and Paul will talk about why an accountant was or was not appointed.

Sport NI has a high-calibre board. It is probably the highest-calibre board on which I have sat. I am a the non-executive director of the British Printing Industries Federation and run the MSO Group, which is a printing and packaging business that is based in the east of the city. Three of the board members, including myself, are Masters of Business Administration (MBA) graduates. I attained the part 2 certificate in accountancy and won an award in my second year at university. I also used to work for Coopers and Lybrand. I am used to running a business that has a turnover of about £40 million and employs 400 people.

Mr McNarry:

I understand that; however, are you saying that the competency and experience of the board members excluded the board from considering the appointment of a qualified accountant?

Mr Walsh:

Absolutely not. As the chief executive of a business, it is important that I am able to analyse and challenge financial figures. My point is that one does not always have to be an accountant to be proficient at accountancy. The board membership includes the chief executive of the Association of Northern Ireland Colleges, the chief executive of the South Eastern Health and Social Care Trust, a director of diversity and equality for the PSNI, a former senior finance manager, and a vice-president of a global company, who is a former director of BT.

Mr McNarry:

So, was it unfair for CIPFA to comment that there may be an over reliance on your executive team in financial matters?

Mr Walsh:

I agree that that comment is an oversimplification and unfair. I do not agree fully with other bits of the CIPFA report, too. The issue of finance is discussed fully at each board meeting; it is analysed and challenged. It is challenged on several levels, not only at the board meeting, but at the pre-board meeting, where the audit committee analyses the management accounts. The audit committee examines the processes and procedures of how the accounts do not necessarily challenge the detail. It makes sure that those are done in line with best practice.

There is a lot of challenge to that, and CIPFA included a one-liner to say that it was not discussed; perhaps, CIPFA did not look deeply enough.

Mr McNarry:

Who chairs the audit and risk management committee?

Professor McCartan:

The Sports Council has a risk management policy, which is operated at all levels. The executive, the committees and the board have a responsibility for input, and it is monitored and evaluated by the audit committee, which also looks at it. Among the benefits of having risk management embedded in Sport Northern Ireland is that it is more likely that objectives will be achieved; less likely that damaging situations will arise; and more likely that beneficial outcomes will be achieved.

I have our risk management policy with me. We manage risk —

Mr McNarry:

I am not challenging your policy on risk management. I want to know who chairs the audit and risk management committee.

Professor McCartan:

The board of Sport Northern Ireland has the primary responsibility for risk management.

Mr McNarry:

Who chairs the committee?

Professor McCartan:

Dominic Walsh.

Mr Walsh:

The audit and risk management committee is chaired by Olive Brown, who is one of the board members.

Mr McNarry:

Are you sure? Are you sure that it is not you, Mr Walsh?

Mr Walsh:

It is definitely not me. I am held to account if there are any issues.

Mr McNarry:

That is all right. I will not hold you to account for something that you are not involved in. So, the chairperson of the audit and risk management committee is Olive Brown. Perhaps the permanent secretary will deal with this appointment — or lack of appointment.

Mr Sweeney:

We should consider whether it should be mandatory that every board has at least one qualified accountant. That is not the current arrangement.

Mr McNarry:

Are you thinking of challenging the CIPFA report and its recommendations. It is pretty strong on this element, not only for Sport NI, but for all arm’s-length bodies.

Mr Sweeney:

I am developing the point. Conversely, as you infer rightly, the report draws attention to the fact that, at the time, there were seven qualified accountants on the executive of Sport Northern Ireland. I understand that there are eight now, so the executive is particularly strong.

Mr McNarry:

CIPFA recognises that. I have already said that CIPFA has said that there might be an over-reliance on financial professionals in the executive team. The chairman of Sport NI was not too happy with that.

Mr Sweeney:

The Minister has a judgement call to make w hen appointing members to the board. At one level, the Department is reliant on the public advertisement process and requires people to come forward by way of self-nomination.

Mr McNarry:

I am sorry to interrupt you, permanent secretary, but I understand all that. However, there was an opportunity to appoint a new board, and in light of what CIPFA has said, it appears to us that an opportunity to deal with something that is of concern — the appointment of a qualified accountant — was missed. Why was it missed?

Mr Sweeney:

It depends on the pool that was available to the Minister at the time. It is our assessment that we have a competent board, and we have a board that is capable of discharging its responsibilities. It comprises people who have strong attributes from experience that they have gained in private and public finance. The fact that —

Mr McNarry:

You did not know who was going on the board. I am talking about a board that has not been appointed. You told me that it is possible that there was not an accountant in the pool from which the Minister had to draw, but that the board was strong in any event, and you have listed its merits. I accept that; it has been detailed to us. I have no qualms about that. I want to know why a qualified accountant was not found when the opportunity arose. If the answer to that is that there was not a qualified accountant in the pool, perhaps we should acknowledge that and ask another question — should pools be enlarged or be allowed to incorporate a qualified accountant to aid with the appointment of one?

Mr Sweeney:

I return to my earlier point about whether it should be mandatory for each public board, for example, to include at least one qualified accountant. The Department’s experience to date is that to make that mandatory might require a special mechanism. The public appointment process might be insufficient to create a large enough pool from which it could be ensured that every board would include at least one qualified accountant. Another way to deal with that issue might be through the secondment of qualified accountants to public boards. The Department has considered that option but has not reached a firm view, nor has it engaged with the Minister on the detail of it.

Mr McNarry:

I am not surprised that you have not reached a firm view.

Will you tell the Committee the size of the pool from which the Minister can choose? He is responsible for making appointments, is he not? Is it a question of sourcing individuals? You could not appoint a qualified accountant because there was none in that pool. Is there any way to extend a pool, perhaps by seeking, headhunting or resourcing an individual? Without making any elaborate mandatory requirement, is it not common sense to recognise that it would be a good idea to have a qualified accountant and work out how to appoint one?

Mr Sweeney:

A good example of how we try to do that is through our advertisements. We draw to the attention of potential applicants the skill sets that we seek, as can be seen in the current campaign for a vice-chair, the advertisement for which draws attention to the financial acumen required. That is one proactive way in which we try to encourage people to apply. For the sake of clarity, I cannot detail with certainty the pool of candidates and whether it contained a qualified accountant. To be able to do so categorically, I would have to check the records.

Mr McNarry:

Would you be kind enough to advise the Committee whether a qualified accountant was in the pool that was available to the Minister?

Mr Sweeney:

I would be happy to do so within the constraints of any data protection issues that would have to be considered.

Mr McNarry:

I do not need any names, simply whether the pool that was available to the Minister contained any qualified accountants, and, if so, how many.

The Chairperson:

If the pool contained any qualified accountants, they were overlooked.

Mr McNarry:

Obviously, they were not appointed.

Mr Sweeney:

As I said, I am happy to deal with that request within the spirit of the data protection legislation.

Mr D Bradley:

Good afternoon. During your presentation, you placed considerable emphasis on training. You mentioned the induction training of board members and their continued professional development throughout their membership of the board. Have all members of the board undergone the necessary mandatory training?

Mr Walsh:

All members have undergone on-board training. I joined the board in January 2008. Not all board members were available for that first board meeting. However, before meeting as a board, a critical mass of members received on-board training in the first week of February 2008. Those who missed that have subsequently been trained.

Mr D Bradley:

Have all board members now been trained to the required standard?

Mr Walsh:

Yes.

Mr D Bradley:

Thank you.

Mr Walsh:

In addition to that initial training, which took place in advance of the first council meeting, the chief executive of the Chartered Institute of Public Finance and Accountancy, David Nicholl, undertook a programme of learning and development for the board members. When they went in to their first council meeting, they had built up their own skills and competencies to conduct the business of the council.

Some months ago, the board was provided with additional training on the roles and responsibilities of a board member, and Sport NI has provided training to its members, particularly in relation to the audit committee. The chairperson and members of the audit committee have undertaken training, the purpose of which is to ensure that appropriate learning and development is taking place. The aspiration is that they will be able to execute their scrutiny roles.

Mr D Bradley:

Thank you. You mentioned the audit committee, which is obviously very important for accountability and monitoring. It might be construed as an issue of some concern that the quorum for meetings of the committee has been set at only two members. Do you consider that that quorum is sufficiently high for a committee that bears such a burden of responsibility? Have the members of that committee received specific training for that particular role?

According to the CIPFA report, the majority of personnel who attend the audit committee are staff members of Sport NI. Is it not the case that, under those circumstances, the challenge role of non-executive board members is lessened? How do you intend to address that concern?

Mr Walsh:

The number of members at meetings of the audit committee has consistently been four or more. I have been in attendance at all the meetings. The executive team does out-number the non-executive members, but the reason for such a large executive team is that it is there to be challenged, whether on performance, places, or participation. Those executive members are there to answer questions, and it is expedient to have them or their officers available to answer the questions there and then. It works extremely well.

Also in attendance at every meeting of the audit committee is a representative of the Comptroller and Auditor General. Frequently there are two officers from the Northern Ireland Audit Office present. They are not there as observers; they participate, provide clarification and make challenges.

Professor McCartan:

I will repeat a little of what the chairman has said. In addition to the committee members, there is a representative of the Comptroller and Auditor General for Northern Ireland, and he or she participates actively in the discussions and debate, exercising both a challenge and a scrutiny role. Also present is the director of corporate services, who has to be there because his prime responsibility is finance, and the internal auditor, who has to be present to advise the committee on issues relating to internal audit. There are also a number of Sport NI officers in attendance, but not as members of the committee. They are there to answer questions and to be brought to task by the committee and its members. That is one of the reasons why they are there.

Although on occasions a number of Sport NI officers attend meetings of the audit committee, their role and function is to provide relevant and timely information to the committee on request. In that way, we try to be as effective and efficient in the conduct of our business as we can.

I will now turn to the second half of the question relating to training. Training has taken place at two levels in the audit committee. The chair of the committee has been trained extensively on the role and function of a chair of an audit committee of a non-departmental public body. In addition to that, members have undertaken training to build upon their considerable experience and skills. Learning can take place through instruction or experientially.

As our chairman has outlined, in the audit committee, there are a number of people who have led large companies locally and internationally. In executing their duties as chief executives and directors of boards, they are cognisant of the roles and responsibilities of audit committee members. To that extent, we hope that we have the right level of scrutiny.

Mr D Bradley:

As the vice-chairperson pointed out earlier, a lot of the questions that will be put to you today arise from events that took place in another company and underline the need for accountability measures to be adopted in all arm’s-length bodies to ensure public confidence.

Is having a quorum of two — possibly staff members — sufficient? Operationally, attendance may not have fallen to that extent, but that is a possibility. In conjunction with your organisation and the Department, we should be eliminating all possible opportunities for a recurrence of what happened in that other company.

Mr Walsh:

The quorum refers to the number of members — it excludes staff. Two is the minimum number of members to be present if a transaction is to happen, and that is two members from a panel of four. That has not happened in the 15 months that I have been present. Staff do not count towards the quorum. The challenge is there as an external control. If an adequate number of members is not available, the meeting is rescheduled.

Mr D Bradley:

Thank you for that information. However, the quorum still seems low. Will you consider reviewing it?

Mr Walsh:

I will have it reviewed by our risk assessment auditor and have it brought into line with best practice.

Mr D Bradley:

What is the average attendance at the audit committee? Have you an analysis showing the proportion of staff as opposed to non-executive members?

Professor McCartan:

We do not have that to hand, but we will forward it.

Mr K Robinson:

Dominic has strayed into some areas about which I also want to ask questions.

I have a quotation from the CIPFA report:

“Although Sport Northern Ireland informed CIPFA that there was challenge and scrutiny at Board level, CIPFA could not form an opinion on the degree of challenge and scrutiny on finance at Board meetings as the minutes only record the Board’s approval of the management accounts.”

My question is framed around that quotation. The CIPFA report shows concern that the majority of the personnel who attend the audit committee meetings — and Dominic has touched on this — are Sport Northern Ireland staff. The feeling is that that might inhibit non-executive members in their challenge function. Has the board addressed that concern, or is it aware that it is a potential concern?

Mr Walsh:

The minutes are a précis of proceedings. We do not record proceedings verbatim. Frequently, financial matters are under discussion and the minutes may include a statement to the effect that management accounts were presented and approved. I can understand that someone reading the minutes might ask how much of a challenge was raised to that. However, at board meetings several times a year, the permanent secretary and deputy permanent secretary are in attendance. Recently, a very robust challenge was made. I assure the Committee that all financial matters are fully challenged. That is an ongoing item at every board meeting.

We have already given a commitment to look at the construction of the audit committee, and if it is not correctly balanced, we will bring it into line with best practice. The challenge of the audit committee is robust, and its meetings, and the contribution of the Comptroller and Auditor General’s team, reflect that robustness.

Mr K Robinson:

Given that your new board has been in place only since January 2008, is there not the possibility that as new boys and girls have come to the board, they would be almost in awe of those whose expertise is day and daily in that field, or has there been a continuation or overlap from the former board?

Professor McCartan:

Perhaps I will answer that in consultation with the permanent secretary. The board of Sport Northern Ireland is a new board. It is about —

Mr K Robinson:

I am sorry to interrupt, Eamonn, but is it totally new, with no carryover?

Professor McCartan:

It is totally new in the sense that the old one ended and the new one started. The new board has a number of residual members — five or six in total, I believe.

Mr K Robinson:

Is that a set percentage or just the way that it occurred?

Professor McCartan:

The selection and recruitment of board members is the responsibility of DCAL. I think that that is just the way that it occurred.

Mr K Robinson:

Do you have any constraints such as, for example, to retain 20% or 40% of the existing board, or does it just evolve with new members coming on board?

Professor McCartan:

Not that I am aware.

Mr K Robinson:

Is that correct, permanent secretary?

Mr Sweeney:

Because I have the details in front of me, I am happy to talk to that. The principle should be one of a rolling type of rotation so that the situation of having to appoint a new board in its entirety is avoided, although there have been occasions with different bodies when we have had to do that. In this instance, however, one, two, three, four, five, six members who were appointed in July 2003 were re-appointed for a further term. In this instance, therefore, there was a board of 14. A full complement would be 15 members. Of a board of 14 members, six were rolled forward for a second term of appointment, and eight were first-time appointees.

Mr K Robinson:

Those are first-time appointees, with no experience at all of being on a board at that level, is that correct?

Mr Sweeney:

No, I could not say that. I would need to have the CVs of the complement of eight in front of me if I were to go through them individually. However, part of the evidence base that they have to produce when competing for a public appointment is to demonstrate previous experience.

Mr K Robinson:

That brings me back to another point, which is a personal view, about a new person coming in. If I had a new teacher coming into my school, I would say to him or her: you tell me what you see, because you are coming in here with new eyes. I have been in the system for so long that I can no longer see things. If one has so many people who have been there before, one is reliant on new eyes, new voices and new perspectives coming in. Are you getting that on that current board, and is it particularly robust?

Mr Walsh:

Absolutely. As the board was constituted last year, we had a look at ourselves and at Sport NI. That involved Eamonn’s team and the executive team telling us what Sport NI is about. Through that education process, we were able to look at it, pick it up and decide whether that was the best way forward. Every month, part of Sport NI’s philosophy is that if, just like in sport, we can do something better, let us do it better.

There might be a misunderstanding about the quality and robustness of the challenge. I would like to burst that bubble. The quality of the challenge, and the quality of the people who are challenging the corporate services director and the finance director in Sport NI, is very robust. At times, if there is the slightest thing out of place, it is challenged.

Mr K Robinson:

So, you have no wilting violets on the board. Is that what you are telling us?

Mr Walsh:

We have no wilting violets.

Mr K Robinson:

No wilting violets. In that case, may I ask — and there are many other school governors around the table — how on earth did you finish up with two members as your quorum? For all of us on school boards of governors, three is our minimum. Is that not correct?

Mr P Ramsey:

Yes.

Mr K Robinson:

That is the absolute minimum. We would not instigate our finance committee or a subcommittee on a board of governors with only two people present. How on earth did you finish up with two, and did no one, a wilting violet or otherwise, say that that is a wee bit low, and let us have a minimum of three?

Professor McCartan:

I understand that the quorum of two people represents 50% of the membership of the board. However, Sport NI is always keen to look at best practice, and we will, as the chairman said, revisit that quorum level to try to allay any concerns that the Committee might have.

Mr K Robinson:

I would welcome that.

Mr McCartney:

I want to raise a few background points. Paul laid out the three levels of scrutiny: the monthly meeting, the quarterly meeting, and the annual meeting. Are minutes taken of all those meetings?

Mr Sweeney:

Certainly, detailed minutes are taken of the quarterly accountability meetings, for which there is a set agenda. The monthly finance review is a more informal affair. A record is kept of the annual accountability meeting between the Minister and the chairperson.

Mr McCartney:

Is the annual meeting attended only by the chairperson and the Minister? Does the chief executive of the arm’s-length body not attend?

Mr Sweeney:

Perhaps, in the past, the Minister, chairperson and chief executive all attended those meetings. The current suite of accountability meetings is held, at the Minister’s preference, between him and the chairperson only. Officials are also in the room. Typically, I would be there. If I were not there, my deputy secretary, Edgar Jardine, would be present, and in this case, an assistant secretary, Hazel Campbell, would be present because, as members are aware, she leads on sports. Therefore, a small number of officials, the Minister and the chairperson would be present.

Mr McCartney:

What type of questions were you asked, Dominic?

Mr Walsh:

I would be asked about any matter ranging from the performance of individuals on the board; whether there were any problems; whether I had any issues with the governance performance of members of the executive team — that sort of thing. Questions were wide-ranging and were developed into working together to promote sport further.

Mr McCartney:

When you were speaking, you laid out what you believe to be best practice and good governance. You discussed internal audit functions; the audit committee; the risk register; comprehensive policies and procedures — for example, on how to make grants — and so on. If you went to a meeting with the Minister, and any of those — internal audit functions, an audit committee, a risk register, comprehensive policies and procedures on finance — were discovered not to be in place, what would you expect to happen?

Mr Walsh:

There would have to be some form of accountability if we had been told that those were in place, and they were not.

Mr McCartney:

Thank you.

Lord Browne:

My question will be brief. It is interesting to note that the CIPFA report states that Sport NI believes that there needs to be a more balanced monitoring regime. It maintains that control of Sport NI by DCAL allowed a greater degree of freedom to enable more effective delivery of outcomes. Does that reflect a divergence of views? I am interested to hear from the permanent secretary first on the Department’s view on that comment, followed by Sport NI.

Mr Sweeney:

That comment reflects the conundrum on the proper role of regulation versus the fact that these are semi-autonomous bodies. If the Department were to micro-manage arm’s-length bodies, it would defeat the purpose of their existence. Although I speak for DCAL, I believe that all Departments struggle constantly to get the balance right between proper regulation and, at the same time, respecting the independence and autonomy of arm’s-length bodies.

Lord Browne:

Would you not say that DCAL is like the major shareholder in a company and that, therefore, it should have a more active role and should, perhaps, have a permanent member on the board, so that the difficulties in communication that are referred to in the report can be overcome? If there were one DCAL member on the board of each arm’s-length body, that member could apply the same criteria to each body without any sectional interests.

Mr Sweeney:

The Department of Finance and Personnel has a view on the role of public servants who sit on public bodies. There is great debate about the pros and cons of that. The way that we work in DCAL is that I, as permanent secretary, will attend at least one board meeting each year. Likewise, the assistant secretary will attend at least one audit committee meeting each year. If, for whatever reason, we think things are untoward or the risk is high, we have the prerogative to increase the frequency of our attendance.

David Nicholl did a superb job in taking the CIPFA review forward in a very short time, but he was reliant on minutes. I was able to go along to a full board meeting of Sport Northern Ireland recently, where I saw for myself the degree of challenge function that was exercised — it is only on doing so that one can form a view.

If I felt that there were issues, or that the risks were particularly high, it is my prerogative to increase the frequency of my attendance at board meetings. Conversely, Hazel Campbell could go to the audit committee meetings more regularly. That prerogative is available to us.

The danger is in getting respect for the fact that these bodies were purposely set up by the Assembly to be at arm’s length; to have a degree of independence from the bureaucracy; to be more fleet of foot; to have that expertise in the arts or in sport that, perhaps, with all due respect, civil servants do not have.

Mr Brolly:

The report suggests that there is the potential for conflicts of interest because members of the board come from the various sporting backgrounds. What is the gender balance of the 15-member board?

Mr Walsh:

Three members of the board are female. They come from different sporting backgrounds. I do not think that we have a cross-over. People may have an interest in or may have played rugby; they may only have played club rugby; they may have an involvement with the GAA or soccer, so there is a mix.

Conflicts of interest are dealt with at every meeting. At the start of every meeting, once the chairperson’s business and matters arising are out of the way, everyone declares their interests. The CIPFA report highlights that very clearly.

At the last board meeting, one of the members put his hand up and stated that he had been on the board of a particular governing body four years ago. Following the CIPFA training, we referred him to the five-year break rule: anything within the past five years, one has to step away from. Even though he had had no contact with that board for four years, he was asked to step away and to declare the conflict of interest. That is what happened.

Professor McCartan:

I support the chairman in his answer. The CIPFA report found that board members are independent from management. Sport Northern Ireland has a code of conduct for board members, including co-opted members and staff, which is enforced. A register of interests of board members is updated each year, and CIPFA found evidence that the board declared conflicts of interests at meetings.

Mr Shannon:

I will take the point that Francie has made a bit further. I accept that board members have a general interest in sports and in specific sports. I appreciate that. Dominic, how do you as chairperson ensure that the conflicts of interest do not affect or impact on the allocation of funding? Secondly, what sorts of decisions are not delegated to the chief executive? What decisions are taken out of the hands of the chief executive and are left to you as chairperson or to other members of the board to act upon?

The Chairperson:

I ask you to park those questions for a second, and ask Nelson to come in with his question, if he wishes.

Mr McCausland:

Are the Sport NI minutes and the register of members’ interests on the website? Paul, Dominic was talking about carrying out an assessment, as chairperson, of board members each year. Is that the practice across all the arm’s-length bodies?

Mr Walsh:

The allocation of funding comes through. There is no bias. We have a full representation, ranging from netball, basketball, table tennis and rugby. An analysis and a table are produced, not only by sport but by geographical region, to see how those funds are allocated. As it comes through the delegated decisions of the places committee and the performance committee, there is the possibility that somebody could try to influence the decisions. However, that does not happen. Everything is done in an incredibly professional manner. The executive team makes all the decisions based on the merits of the application, rather than on any other factors.

Mr Shannon:

Are those statistics available to the people on the board? Are their interests in sport available for this Committee to view?

Mr Walsh:

The information is made available to those on the board. The analysis reporting against the key performance indictors has been available twice during my time. I do not have that information to hand, but if members want to have a breakdown of it, I will be happy to provide it.

Mr Shannon:

Through the Chairperson, I would be happy to have that information made available to the Committee.

What decisions are taken out of the hands of the chief executive and made by you or passed by other members of the board? I want to get an idea as to whether everything goes by the chief executive. I presume that it does not. What does the chief executive delegate to you, or what decisions can you take that you do not have to ask him about?

Mr Walsh:

The board makes decisions on strategy and direction and, occasionally, on key issues; for example, the strategy on elite facilities. I would be uncomfortable with decisions sitting with me as a single individual without being part of the board. However, the executive and operational issues of Sport NI sit with the chief executive. We deal with the Department hand in glove, and we ensure that the chief executive carries out that function as the accounting officer. He reports as the accounting officer for Sport NI. However, if I were to split them, strategic directions are issues that are more likely to be a board issues, rather than operational issues.

Mr Sweeney:

I will differentiate between the arm’s-length bodies and North/South bodies, as those bodies have separate arrangements. Members appointed to the arm’s-length bodies by DCAL and the Minister are assessed each year. I do not want to give the impression that the level of assessment is a very in-depth record. There is a pro forma, and in the first instance, one would look at regularity of attendance to see whether the member has been a regular attender and whether his or her contribution has been substantive. It does not involve pages and pages of information. Quite often it is a set of pithy remarks. That assessment is carried out by the chairperson in the first instance. Until fairly recently, the chairperson of the arm’s-length body would meet with the deputy secretary and go through the schedule. The Department would then carry out an assessment of the chairperson.

As regards taking the process forward, the deputy secretary and I have split responsibilities. I will take responsibility to meet with the chairpersons of a number of our arm’s-length bodies, expressly with the view to doing an annual assessment of the members and the chairpersons. My deputy secretary, Edgar Jardine, will take forward a similar process with a small number of our arm’s-length bodies.

Mr McCausland:

Is there any sort of assessment of the North/South bodies, or is that not appropriate, due to the nature of their business?

Mr Sweeney:

I can talk only about the two bodies for which we have responsibility: Waterways Ireland does not have a board, so the issue does not arise; and we have not applied a similar formal process to the North/South Language Body in the way in which we have assessed the members of the arm’s-length bodies for which the Minister solely makes appointments.

The Chairperson:

If members have no further questions, I thank —

Mr McCartney:

I have a question in relation to the annual accountability meetings. Is that a new thing, or have they been in place for some time?

Mr Sweeney:

They have been taking place for some time. What is new is that the Minister meets only the chairperson. In the past, those meetings would typically have involved the chairperson and the chief executive.

Mr McCartney:

Therefore, has the meeting with the Minister been in place for longer — say up to five years?

Mr Sweeney:

Yes, previously the meetings would have been attended by the Minister, the chairperson and the chief executive.

Mr McCartney:

OK.

The Chairperson:

OK. I thank the permanent secretary, Mr Sweeney; Ms Campbell, the Department’s acting head of sport, museums and recreation; and Professor Eamonn McCartan and Mr Dominic Walsh, both from Sport NI. Thank you very much for attending.