Barnardos Publishes HSE Internal Audit Report into its Operations

05 Oct 2016 in Press Releases, Featured

Barnardos has received the Report of an internal audit conducted by the HSE Internal Audit Division, commissioned by TUSLA as part of their agreed audit plan for 2015. TUSLA, and formerly the HSE, fund approximately 55% of Barnardos’ work with children and families.

We are first and foremost happy that the HSE Internal Audit team has stated that the primary purpose of the Audit has been satisfied and that all funding of Barnardos by the HSE/Tusla during the Audit period has been "correctly and fully accounted for".

The Overarching Opinion of the Report begins by stating “In Internal Audit’s opinion, the Board has established an appropriate system of internal control to ensure it meets its stewardship responsibilities. For example the existence of over 45 policies demonstrated that Barnardos was focused on internal controls and it was evident that a lot of work had been undertaken in preparing these policies”.

The Audit Report makes a series of recommendations for improvement. Barnardos will take all these on board.

Update 7 April 2017. Of the 40 recommendations included in the report, Barnardos had responsibility to address 38.  All 38 recommendations were fully implemented by March 31st 2017. Barnardos has reported this to the HSE Internal Audit team in line with our agreed reporting relationship.

The audit covered the period January 2012 to April 2015. The audit team spent three weeks in Barnardos in April 2015, and submitted some further queries by e-mail in the period after that. Barnardos was supplied with a draft report in March 2016, and invited to respond to the recommendations. We did this, and also met the Internal Audit team on a couple of occasions.

Their final report was sent to us on Monday 26 September 2016. It was considered by the Board of Barnardos at a regular meeting on Wednesday 28 September. The Board has decided to publish the Report in full. It is therefore being placed on Barnardos website today, accompanied by this statement.

We are pro-actively publishing the full HSE Internal Audit because we are committed to the fullest possible transparency and accountability. We have always sought to earn the trust of the children and families we work with, the organisations that help to fund that work, and the thousands of people who support us. Internal audit is one of the ways trust is maintained, and no matter how tough and bald the language of such reports, they help to strengthen the necessary controls to ensure that the public’s money is properly managed and wisely spent.

It is open to everyone to read this report in full. Barnardos’ reaction to the report is set out below.

  1. We welcome the finding that all funding provided by HSE/TUSLA to Barnardos was accounted for fully and that the Audit team found an “appropriate system of internal control to ensure (the Board) meets its stewardship responsibilities”.
  2. The Report raises issues about certain aspects of the reporting of the CEO’s salary arrangements and makes some recommendations arising from these. These are commented on below by the CEO, who has the full support of the Board of Barnardos in doing so. The Board is entirely satisfied that all these issues have been dealt with in an open and transparent manner over the years. 
  3. The Report also discusses what it describes as large bank balances and what it also describes as “more than adequate” reserves. Barnardos fully agrees that it is important to continue to keep this under review to get the appropriate balance between holding a prudent level of reserves, to enable us to maintain services to the children and families we work with, and to continue to achieve the objectives of the organisation. Barnardos’ reserves are the equivalent of 9-10 weeks of operating costs, which is modest in terms of prudence and good practice. We keep reserves under constant review through the work of the Audit Committee and the entire Board of Barnardos.

    Bank balances at any point in time need to be adjusted to take account of amounts due to Barnardos, amounts owed by Barnardos to suppliers, and income that needs to be deferred into the next period. This reduces substantially the funds available to Barnardos and free reserves are the appropriate measure of this.
  4. In addition, the Report sets out a number of recommendations aimed at tightening controls, in relation to such areas as post opening, Processes around the use of credit cards, the management of petty cash, purchasing and invoicing policy and practice, accounting for IT equipment, management of the company safe, and a number of other matters. Barnardos has taken on board these recommendations. As part of our commitment to continuous improvement, we will always seek to ensure that our already good controls are fully implemented. 
  5. Finally, the report claims that some senior management salaries within Barnardos need to have “due regard to Government (ie health sector) policy”. The Board of Barnardos will continue to review this, while noting that HSE/TUSLA have acknowledged that (as a non-government organisation) Barnardos is not covered by public pay policy. The Board also notes that the small number of personnel involved are all on levels of remuneration that are comparable with those in the public service, and have already voluntarily taken pay cuts in excess of those taken by everyone else in Barnardos.

Barnardos welcomes this report. We are grateful for the fact that, although they have not written it down, the Internal Audit team made the point to us in several discussions that Barnardos is among the best organisations they have audited. We regard that as a really positive comment on the professionalism and commitment of our team.

We hope our decision to publish it in full will be seen as a further demonstration of our commitment to transparency. Trust matters to us – our work would be impossible without it.


Additional Comment from Fergus Finlay, Barnardos CEO:

“The HSE Internal Audit Report into the operations of Barnardos raises issues about several aspects of my salary arrangements, and makes several recommendations.  We have already implemented these recommendations in full.

However, it is important that some context be offered. It is also important to be clear that in raising these issues, the Internal Audit team make no suggestion of wrong-doing. There are no secret pay arrangements in Barnardos, no top-ups, no extras like life or health insurance. My salary and conditions, and indeed all the various matters referred to here, have always been openly published by Barnardos.

The Internal Audit issues relate to three areas.

1. Salary linkage (pages 10-13 of the Report and recommendations 1 and 2)

In 2010, at my request, the Board placed me on the HSE Assistant National Director Scale, at a point approximate to my then existing salary. I asked for this linkage because I was anxious that my salary would be seen to be in line with appropriate public sector comparisons. Internal Audit finds that any reference to this comparison is inappropriate because it no longer exists.

The link was broken by two circumstances. First, as the recession hit, I voluntarily took a series of pay cuts. Second, the comparative scale was in any event affected by the Haddington Road and Croke Park agreements (Barnardos was not covered by either of these).

So the link established in 2010 is no longer valid. It has never been referred to in any Barnardos publication, or by me, except when it was appropriate to do so, and in accordance with the Internal Audit recommendations no such reference will be made in future.

2. My “donations” to Barnardos (pages 14 – 17, 20 – 21 and recommendations 4, 5, and 9)

I’ve always been conscious that I should, where possible, contribute as much as I could to the cost of my own salary. I’ve said publicly, for example, that I try to earn what I can towards that cost, and in some years I have been more successful than others. I do that in a variety of ways – public speaking, some broadcasting fees, and occasional personal fundraising initiatives.

If I’m asked to speak to an audience because of the public profile I have, and a fee is offered to me, I decline the fee and ask instead that a contribution be made to Barnardos. Information assembled by Barnardos and supplied to the Internal Audit team shows that over a period of several years around €82,000 was contributed in this way. I am also paid an annual honorarium for my work as Independent Chair of the Dolphin House Regeneration Board. Barnardos has determined that €30,500 has been donated to our work by Dublin City Council from this honorarium.

In the course of its work, the Internal Audit team appeared to form the view that this income had been presented by me as a series of personal donations to Barnardos. I have never knowingly done so. However, I accept the recommendations of the Audit team that no unclear inference should be made or drawn in respect of my continuing efforts to contribute to the cost of my salary.

3. My writing for the Irish Examiner (Recommendations 6, 7 and 8)

I write a weekly column for the Irish Examiner. I take it very seriously, and I do it in my spare time. I invoice the Irish Examiner once a month in respect of the fees involved. When I began working for Barnardos I asked that the invoice be processed through my salary. I did this to ensure that the income was treated as PAYE income and always fully tax compliant. I pay Barnardos a monthly fee of €200 to cover any administrative time involved, and to ensure that Barnardos benefits financially from the arrangement.

The Internal Audit report finds that this processing arrangement is inappropriate, although we have reported it transparently in our published annual reports. We have ceased the arrangement. 

The Internal Audit team goes on to question the appropriateness of these columns being written in the first place, and for Barnardos to have any association with them. They are variously described as private, personal, and not mentioning Barnardos. Of course, the team is entitled to that opinion. I respectfully disagree. The great majority of my columns deal with aspects of the social justice agenda with which Barnardos is concerned. I have always been grateful to the Irish Examiner, who have given me complete freedom to express my own opinions on these issues.”


Notes to Editors:

Read Barnardos' HSE Audit Report