AUDIT AND RISK COMMITTEE REPORT

The Agency merged the separate Audit and Risk Committees into a combined Audit and Risk Committee with effect from 1 February 2017. The Committee’s role is to assist the Agency in the oversight of:

• the quality and integrity of the financial statements, the review and monitoring the effectiveness of the systems of internal control, the internal audit process and the compliance function, and to review and consider the outputs from the statutory auditor; and
• the Agency’s risk management framework including setting risk appetite, monitoring adherence to risk governance and ensuring risks are properly identified, assessed, managed and reported.

The Committee comprises of four non-executive members of the Agency:

• Martin Murphy, Chairperson
• Maeve Carton
• Mary Walsh
• Susan Webb

Martin Murphy, Mary Walsh and Susan Webb were appointed to the Committee with effect from 1 February 2017. Maeve Carton was appointed to the Committee with effect from 29 March 2017.

The Committee met formally on six occasions in 2017. It also held an additional working session to review the detail of the financial statements and a number of briefing sessions on business issues relevant to the Committee.

Financial Reporting

The Committee reviewed the draft 2017 financial statements and recommended them to the Agency. The review focused on the consistency of approaches across the financial statements, appropriate estimates and judgements, the clarity and completeness of disclosures, and relevant provisions of the revised Code of Practice for the Governance of State Bodies. The Committee also reviewed the Governance Statement and Board Members' Report, and statements on risk management for inclusion in the Annual Report. As part of its review of the financial statements, the Committee met with representatives of the Office of the Comptroller and Auditor General (the statutory auditor) to discuss its Audit Findings Report.

Internal Control

The Committee reviewed the effectiveness of the system of internal financial control. It also reviewed the Statement on Internal Control to be included in the 2017 financial statements and recommended it to the Agency. The review was informed by a report from management in relation to the assertions contained in the Statement and also the Committee’s detailed work programme, including regular internal audit, risk and compliance reports.

Internal Audit

The Committee received regular reports from the Head of Internal Audit (the Head of Internal Audit is supported by an external firm, currently KPMG). It reviewed the key findings from the outcome of individual internal audit reviews completed under the 2017 risk-based internal audit plan and monitored the implementation of audit recommendations. It approved the 2018 risk-based internal audit plan and updates to the Internal Audit Charter. The Committee also reviewed the effectiveness of the internal audit function and concluded it was operating effectively. The Committee meets with the Head of Internal Audit without management at least annually.

Following a tender process, KPMG were appointed in 2014 to provide internal audit services for a three-year term, with an option for the NTMA to extend the contract for a further term of two years. Following review of KPMG’s performance, the Committee recommended to the Agency that the option to extend the contract be exercised and KPMG were appointed for a further two-year term to 31 October 2019.

Statutory Audit

The NTMA’s statutory auditor is the Comptroller and Auditor General. The Committee reviewed the external audit plan, the key areas of focus and the audit terms of engagement. It also monitored management’s responses to the external auditor’s findings arising from the audit of the 2016 financial statements. The Committee meets with the external auditor without management at least annually.

Risk

The Committee reviewed and recommended to the Agency updates to the Risk Management Policy and Framework and to the Risk Appetite Framework. It also approved updates to a number of specific risk policies as provided for under the Risk Management Policy and Framework. It monitored the NTMA’s position against its defined risk appetite and approved updates to the suite of key risk indicators. It also approved the annual Risk Management Business Plan.

The Committee reviewed the principal risks faced by the NTMA based on a strategic risk assessment and reported the outcome of its reviews to the Agency. It also reviewed the underlying risk registers and considered a report under the NTMA’s stress testing framework.

The Committee reviewed regular reports from the NTMA’s Risk Management function in relation to financial, enterprise and investment risk. It reviewed the effectiveness of the Risk function and concluded it was operating effectively.

The Committee oversaw a review of the NTMA Risk Function (with external third party support) with regard to the most appropriate strategic approach and the NTMA’s specific risk management requirements in the context of its business goals and objectives.

Compliance and Protected Disclosures

The Committee reviewed and approved updates to the Reporting of “Relevant Wrongdoing” and Protected Disclosures Policy. It monitored progress against the 2017 Compliance Plan. It also approved the 2018 Plan and Compliance Framework, and received regular reports from the Head of Compliance. The Committee reviewed the effectiveness of the Compliance Function and concluded it was operating effectively.

Other

The Committee carried out a number of other activities including review of the NTMA’s implementation of the revised Code of Practice for the Governance of State Bodies, its readiness for the General Data Protection Regulation and its procurement policies and procedures as well as consideration of a number of specific business issues from a risk perspective, including oversight of an external high level view of the ICT function to ensure it is fit for purpose to meet the NTMA’s ICT requirements and demands against the background of the pace of change in the external ICT environment to end-2020.

The Committee completed a review of its performance in January 2018 and reported to the Agency on this review, noting it had considered how to most effectively engage with the Agency on risk issues.

INVESTMENT COMMITTEE REPORT

The Investment Committee is a statutory committee provided for by the National Treasury Management Agency Act, 1990 (as amended).

The Committee assists the Agency in the control and management of the Ireland Strategic Investment Fund by making decisions about the acquisition and disposal of assets within such parameters as may be set by the Agency, advising the Agency on the investment strategy for the Fund and overseeing the implementation of the investment strategy.

The Committee is required to comprise of two appointed members of the Agency and not more than five persons who are not members of the Agency but who have acquired substantial relevant expertise and experience and who are appointed by the Agency with the consent of the Minister for Finance (external members). The Agency has decided that the Committee should have three external members. The members of the Committee are:

• Susan Webb, Chairperson (Agency member)
• Gerardine Jones (Agency member)
• Richard Leonard (external member) Company Director and former Partner, Grant Thornton Ireland
• Mark Ryan (external member) Company Director and former Managing Director, Accenture Ireland
• Julie Sinnamon (external member) CEO, Enterprise Ireland

Gerardine Jones was appointed to the Committee with effect from 29 March 2017. Richard Leonard and Julie Sinnamon were reappointed to the Committee with effect from 27 February 2018.

The Committee met on 13 occasions in 2017. Its main activity was review of detailed investment proposals from management. Decisions on investment proposals of up to €150m have been delegated to the Committee by the Agency. Where the Committee supports an investment proposal in excess of €150m, it makes a recommendation on the matter to the Agency. The Committee also actively monitored the near-term investment pipeline in order to provide timely feedback to management on potential investment opportunities and to discuss any likely issues at an early stage.

The Committee reviewed proposed amendments to the ISIF’s economic impact implementation framework and provided feedback to management, this work was ongoing into 2018. It also reviewed the Sustainability and Responsible Investment Strategy and recommended amendment of the policy to provide for exclusion of certain categories of investment on a limited basis and on investment grounds.

As the ISIF moves out of its start-up phase and its volume of investment has increased, portfolio monitoring has formed an increasing part of the Committee’s activity. The Committee reviews the performance and economic impact of individual investments in Ireland, the Portfolio Diversification Framework (including investment limits and tolerance levels), the performance of the Global Portfolio and the implementation of the Sustainability and Responsible Investment Strategy on a quarterly basis. Overall performance, deployment and activity are reviewed monthly, while implementation of the investment strategy is reviewed twice annually.

The Committee also reviewed its terms of reference and recommended some minor amendments to the Agency. It undertook a review of its performance and reported to the Agency on this review. As part of the review, it agreed to expand its existing programme of briefings from external experts in investment areas relevant to the ISIF.

REMUNERATION COMMITTEE REPORT

The Remuneration Committee assists the Agency through review and approval of the NTMA’s overall remuneration policy, review and approval of any performance-related pay schemes operated by the NTMA and approval of the total annual payments to be made under any such schemes. It also makes recommendations to the Agency on the remuneration of the Chief Executive.

The Committee comprises of four non-executive members appointed by the Agency:

• Maeve Carton, Chairperson
• Martin Murphy
• Willie Walsh
• Robert Watt

Maeve Carton was appointed to the Committee as Chairperson with effect from 29 March 2017. Martin Murphy and Robert Watt were reappointed to the Committee with effect from 24 February 2018. Willie Walsh, as Agency Chairperson, is a member of the Committee under its terms of reference.

The Committee met on two occasions in 2017. It reviewed and approved the total amount in performance related payments to be made in respect of 2016. It reviewed the proposed criteria for the appointment of external members to the new SCA Strategy Committee and the proposed external members, prior to their appointment by the Agency. It also considered the implications for the NTMA of the Public Service Pay and Pensions Bill introduced in November 2017.

The Committee reviewed its terms of reference and recommended some minor amendments to the Agency. It carried out its first review of its performance and reported to the Agency on this review in January 2018. The Committee concluded it was operating satisfactorily and that no issues had arisen for the attention of the Agency.

STATE CLAIMS AGENCY STRATEGY COMMITTEE REPORT

The State Claims Agency Strategy Committee was established on 1 August 2017. Its purpose is to assist the Agency in the performance of its State Claims Agency functions by providing advice and guidance on strategic and policy issues with regard to the State Claims Agency.

The Committee comprises of seven members: two members of the Agency, the Director, SCA and four persons who are not members of the Agency but who have acquired substantial relevant expertise and experience and who are appointed by the Agency with the consent of the Minister for Finance (external members). The members of the Committee are:

• Mary Walsh, Chairperson (Agency member)
• Derek Moran (Agency member)
• Ciarán Breen (Director, SCA)
• Professor Sir Sabaratnam Arulkumaran (external member)
  Professor Emeritus of Obstetrics and Gynaecology at St. George’s University of London
• Tom Beegan (external member)
  Risk Consultant and former CEO of the Health and Safety Authority
• Donogh Crowley (external member)
  Former Partner, Arthur Cox Solicitors
• David Moloney (external member)
  Assistant Secretary, Department of Public Expenditure and Reform

Other than David Moloney who was appointed with effect from 1 December 2017, the members were appointed with effect from 1 August 2017.

The Committee met once in 2017. Its second scheduled meeting in 2017 was deferred and held in January 2018. The main items considered at these meetings were:

• The SCA’s three-year rolling business goals;
• Current and future issues with regard to the costs of general and clinical claims;
• The strategic approach being taken by the SCA in respect of a number of significant mass actions against the State; and
• The planned Clinical and Enterprise Risk Management Programmes for 2018.