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Summary

  1. Renewable Heat Incentive Inquiry examining botched energy scheme
  2. Senior DETI auditor Elaine Dolan answers questions from the inquiry
  3. Inquiry set up after public concern over scheme's huge projected overspend
  4. Retired Court of Appeal judge Sir Patrick Coghlin chairing inquiry at Stormont
  5. Public evidence sessions expected to last until well into 2018

Live Reporting

By Iain McDowell and Robin Sheeran

All times stated are UK

  1. That's all for now...

    Mr Aiken realises he's run out of time for today and Dame Una O'Brien tells him: "You've left us with a cliffhanger."

    Mr Hughes' boss Mr Wightman will be back in the hotseat next week so we may get to hear the denouement then.

    Stormont's Parliament Buildings

    Otherwise we could have a long wait as Mr Hughes won't be back for several months, when he'll return to answer questions about the later stages of the RHI scheme debacle.

    Join us for more live coverage tomorrow morning at 09:45 when Ofgem official Gareth John will be giving evidence - see you then.

  2. 'Refuse applications to ensure spending doesn't increase'

    Shortly after his email to finance officials, Mr Wightman was told to by one of them to "please stop entering into commitments immediately to ensure that monthly cumulative expenditure does not increase".

    Mr Hughes says he and Mr Wightman "realised that we can't do this".

    A hand hittig an emergency top button

    "We have a scheme backed by legislation - we can't just throw a switch," he adds.

    Mr Wightman told the finance officials that to close the scheme would require a "reasonable lead-in time".

  3. 'RHI a success story and we need more money for it'

    In May 2015, the extent of the spend on the RHI scheme was becoming clear to the DETI officials running the initiative.

    Stuart Wightman, the head of the department's energy efficiency branch, was asking Stormont's finance department for urgent clarity about what money would be available for the initiative, noting that "since I joined DETI in June the monthly expenditure has effectively tripled".

    "We are already committed to an annual spend of £17m," he said, pointing out that was an "overspend of £4.2m" a year.

    Burning wood pellets

    Closing the scheme "should be a very last resort as it would be very damaging for the local renewable heating and poultry industry and would generate a lot of negative press and correspondence for the department".

    He argued that RHI scheme had been a "success story" and finance officials should be making the case to receive more money from the Treasury for it.

    Mr Hughes, who worked under Mr Wightman, tells the inquiry that he agreed with that analysis and admits that they didn't realise at that stage that claimants on the scheme were receiving more money than had ever been intended.

  4. Witness Seamus Hughes returns to give evidence

    As he takes his position to question returning witness Seamus Hughes, the inquiry's junior counsel Joseph Aiken (below) jokes that he's been "placed under intolerable pressure from colleagues at the bar behind me to finish on time at a quarter-to-five".

    Mr Aiken's joke

    Could it possibly be that he's developing a reputation for running late? Surely not!

    Veteran DETI official Mr Hughes - who oversaw the day-to-day running of the scheme from midway through 2014 - is back in the hotseat for an hour or so and the inquiry is picking up from where it finished yesterday.

  5. 'People taking responsibility hasn't happened enough'

    Dame Una O'Brien thanks Mrs Dolan for "taking responsibility for those areas where the internal audit service did not perform its role adequately".

    "They're perhaps words we hear too infrequently so far in this inquiry," the inquiry panellist adds.

    View more on twitter

    "I appreciate that it takes a lot given the nature of your work for you to have come and said that and thank you for being so frank with the inquiry."

    That brings Mrs Dolan's evidence to an end and it's now the turn of DETI civil servant Seamus Hughes to return to the Senate chamber again.

  6. 'Wrong people end up in jobs with big budgets'

    Some of the reasons why the RHI scheme became so problematic were staff shortages, time pressures, some "inexperienced" audit staff and some civil servants "ultimately didn't fulfil their responsibilities", according to Mrs Dolan.

    "One of the key lessons is it's important to have the right people in post," she explains.

    Pound coins

    As someone who entered the civil service from the private sector, she says she's noticed that "very often... people with the wrong backgrounds or wrong experience end up in a post with a significant budget and significant responsibilities".

    There should be a responsibility on the individual in such a post to know and acknowledge that, she adds.

  7. 'Not enough done to learn lessons of past failures'

    Mr Scoffield

    Mr Scoffield raises a number of previous DETI projects in which similar problems to those in the RHI scheme arose "time and time again" around project management and governance.

    Asked whether enough was done to learn from those failures, Mrs Dolan says she thinks "the tone at the top was appropriate".

    "Obviously when something like RHI arises then that would suggest that enough wasn't done," she says, adding that she believes there was a drive to ensure lessons were learned.

  8. 'Officials should've investigated whistleblower's claims'

    Concerns about the RHI scheme that were raised with the then DETI minister Arlene Foster by the so-called whistleblower Janette O'Hagan should have been drawn to senior officials' attention, says Mrs Dolan.

    Mrs O'Hagan first contacted Mrs Arlene Foster and her department in 2013 to point out that the incentives on offer through the initiative were "leading to misuse" of heat in some cases and claimants were being paid to "use as much [heat] as they can".

    Wood pellets

    Mrs Dolan says that the civil servants who were running the scheme should "at the very least" done "a little bit of investigation" - if they'd done that they "would've found statistics to support the allegations".

    "At that point, I think, there should've been no doubt that there was irregularity."

    And she adds that she - as the department's internal audit boss - should've been informed and more formal investigation could've been carried out.

  9. 'Review of Ofgem contract cancelled'

    Ofgem - the RHI scheme administrator - was classified as an external delivery organisation (EDO).

    Government departments regard EDOs as representing particular risks as they may not have appropriate governance arrangements in place.

    DETI's service contract with Ofgem was to be inspected by the auditor KPMG in 2013-14 and Mrs Dolan warned it that access to the administrator could be a problem.

    Mr Scoffield asks a question

    "It was highly unlikely that Ofgem were going to let KPMG in to do a standard EDO inspection," she tells the inquiry.

    It was agreed that the standard EDO inspection might not be suitable so DETI's audit team proposed deferring the Ofgem EDO review until 2014-15, which Mrs Dolan says she was "comfortable" with because at that point the scheme had only recently commenced.

    But it ultimately posed a problem - in 2014-15 Ofgem was no longer considered by DETI to be an EDO and the review was cancelled, although the witness can't explain why the administrator's status was changed.

  10. 'Complete change of scheme staff meant risk increased'

    The three civil servants who had been working on the RHI scheme from its conception all left DETI within a few months of each other, meaning an entirely new team then assumed responsibility for it.

    That turnover of staff has been described by many witnesses as unusual and some have said it shouldn't have happened because it stripped the department of all of the direct knowledge and understanding of the scheme.

    People looking at charts

    DETI's auditors were not told of the staff changes, according to Mrs Dolan and she says they should've been informed in order to keep a closer eye on the new team's work.

    "If it'd been brought to our attention that all of the key players had effectively moved on within a short space of time then from an audit perspective you'd associate that area with more risk."

  11. 'I take responsibility for audit failures'

    The RHI Inquiry

    The auditor who carried out the review of the RHI scheme - reporting "no issues" with it - did not perform their role adequately, says Mrs Dolan.

    She reiterates the point she made before lunch that the auditor didn't challenge the inaccurate direction of DETI's energy team that Ofgem was responsible for the scheme and "walked away from that audit with the expectation that there was limited controls and monitoring" that the department should have in place.

    She says that responsibility for the failure ultimately lies with her as the head of DETI's internal audit.

  12. Time for lunch...

    There are a few more questions for Mrs Dolan to answer so she'll be back for about an hour after lunch.

    After that we'll be hearing more from Seamus Hughes, who sat on the witness chair yesterday.

    Join us again from 14:00.

  13. 'No professional scepticism applied in scheme audit'

    Elaine Dolan

    There was "no professional scepticism applied" by the auditor who carried out the project management review of the RHI scheme, says Mrs Dolan.

    She suggests that the auditor took it at face value from DETI's energy team, which was responsible for the scheme, that Ofgem, the scheme administrator, was responsible for the project, and therefore he or she didn't consider the necessary questions.

    Dame Una says she can't understand why questions weren't asked at the time about whether or not the audit arrangements in place for the scheme were actually working properly.

  14. 'Audit report left blank section on RHI payments'

    The RHI scheme was included in a project management review for 2013-14 and in the report from that review the number of payments and the value of payments through the initiative was recorded as "not applicable".

    It was left blank because there was no direct access to Ofgem's records.

    A person looking a figures

    Mr Scoffield puts it to the witness that there were no formal project management structures in place for the RHI scheme and asks if that should've been something identified by the review.

    "Yes," Mrs Dolan replies and sh agrees that it appears the auditor undertaking the review believed that Ofgem was managing the project and, in Mr Scoffield's words, "had it covered".

    The auditor in question was from the accountancy firm ASM Chartered Accountants, brought in by DETI on a staff substitution contract to help the department get through its auditing backlog.

  15. 'Scheme not included in project review'

    DETI's internal auditors carried out project management reviews - initiatives involving grants were a central focus of those.

    Mrs Dolan says the auditors were interested in "money that went out the door".

    The RHI Inquiry

    There was a project management review in 2011-12 but the RHI scheme was not included in that.

    "We didn't think it was significant enough," the witness explains - the initiative was still in development at that stage so the spend at the time was minimal.

  16. 'Scheme administrator refused full audit access'

    DETI's internal auditors and the NIAO wanted full audit access to material held by the administrator Ofgem in relation to the RHI scheme.

    That access would allow them to "follow the money" to ensure that the right amount of subsidies went through Ofgem and ended up with claimants who were entitled to it.

    Full audit access would've given the auditors "access to the systems, the documents and the people within Ofgem to undertake whatever audit assurance work we considered necessary", says Mrs Dolan.

    People carrying out an audit

    But it "soon became apparent" in late-2012 that Ofgem would not allow that and a "workaround" was sought.

    The agreement was that the administrator's auditor Deloitte would provide DETI with the relevant assurances on issues of fraud investigation and governance of the scheme and relay any concerns it had to the department.

    Mrs Dolan says DETI's auditors wanted to have a "greater input" to the terms of reference for Deloitte's audit process and to have sight of the final reports but that wasn't permitted.

    Inquiry chair Sir Patrick Coghlin said any influence DETI might've had was "diluted" and the agreement wasn't legally binding, allowing Ofgem to "do what they want, in many ways".

  17. 'Auditors should go in and uncover risks'

    Inquiry panellist Dr Keith MacLean observes that while there was an "endemic" lack of flagging up of RHI scheme risks there was another problem - nobody was looking for them.

    "I would've thought that that was the sort of role that audit [should play]," he says, suggesting that Mrs Dolan's team should "go in and uncover" the risks.

    A magnifying glass

    The witness disagrees, saying that auditors "have no responsibility in relation to the identification of risks".

    Dame Una O'Brien, who brings her vast experience as a former top Whitehall civil servant to the inquiry panel, says she "looked to internal audit to be your eyes and ears" to notice potential pitfalls.

  18. 'Nobody was flagging any risks to me'

    Nobody was "flagging any risks" about the RHI scheme to Mrs Dolan when it was being set up, she says.

    But knowing what she knows now, she says there arguably should've been a full systems audit of the initiative.

    Mr Scoffield asks a question

    Mr Scoffield (above) asks her to stick to the factors that were visible at the time, disregarding hindsight - for example, the scheme was going to cost millions of pounds, it was a priority for DETI's energy team, it was novel and an external organisation - Ofgem - was administrating it.

    Considering those points, the witness says she doesn't think her approach was unreasonable at the time, adding that she "wasn't aware of the complexities of the scheme".

  19. 'Officials only came to us when something went wrong'

    DETI civil servants who were setting up new projects involving the spending of public money "very seldom" approached the department's auditors for advice, says Mrs Dolan.

    She describes the guidance service offered by her audit team as having been "under-utilised".

    Elaine Dolan

    "Across the department we were very seldom approached by someone who was about to introduce a change or something new, seeking advice and guidance," she says.

    But civil servants did go to the auditors "when something had gone wrong, maybe to identify how to fix it".

    Mr Scoffield suggests that project teams were "generally were trying to avoid" the auditors and Mrs Dolan says that's a fair statement.

  20. 'Opportunity missed to set scheme up right'

    There was a "real opportunity missed" for DETI's energy team to benefit from the internal auditors' help with the RHI scheme, says Mrs Dolan.

    She says auditors would've "been best used" in overseeing the link between the department and the scheme's administrator Ofgem.

    Two women looking at a document

    "That's one of the areas where I think we could've provided value in getting the scheme set up right," she tells the inquiry.

    She says she "tried to promote" the auditors' advice and guidance service to the energy team but she's not aware that they took her up on that.