The NTMA is constituted as an Agency (Board) of nine members with over-arching responsibility for all of the NTMA’s functions (excluding NAMA and the SBCI which have their own separate boards). Six members, including the Chairperson, are appointed by the Minister for Finance. The Chief Executive of the NTMA and the Secretary Generals of the Departments of Finance and Public Expenditure and Reform are ex officio members of the Agency. The Agency reports to the Minister for Finance.

The term of office of an appointed member is five years, other than the initial appointed members of whom two members are appointed for three years and two members are appointed for four years. The Minister for Finance determines the level of remuneration of appointed members. The ex officio members do not receive any remuneration in respect of their membership of the Agency.

There were some changes in Agency membership during 2016 and 2017. Brendan McDonagh, appointed on 22 December 2014, resigned from the Agency with effect from 24 October 2016. Gerardine Jones was appointed to the Agency on 8 March 2017.

The NTMA’s functions are vested in the Agency, which may delegate functions to the Chief Executive. In the performance of its duties, the Agency focuses on providing strategic direction and oversight to the organisation and ensuring there are appropriate controls in place, while delegating operational matters to management. It seeks to support and challenge management in the achievement of the NTMA’s goals and in fostering a corporate culture that will contribute to the delivery of these goals. There is a formal schedule of matters reserved for decision by the Agency. This schedule includes:

• Annual Report and Financial Statements.
• Risk Management Policy and Framework.
• Risk Appetite Framework.
• Operating budget.
• Remuneration of Chief Executive (after consultation with the Minister).
• Overall remuneration policy.
• Exchequer Funding Plan.
• ISIF Investment Strategy.
• ISIF Irish Portfolio investments (investment decisions of up to €150m are delegated to the Investment Committee).

The Agency has established a number of committees to assist in discharging its responsibilities. At 31 December 2016, the Agency had four committees, each with formal terms of reference:

• Audit Committee.
• Investment Committee.
• Risk Committee.
• Remuneration Committee.

The Agency carried out the first annual review of its effectiveness during 2016. This review took the form of a structured self-assessment evaluation by the Agency and its committees. Arising from the review process, the Agency agreed that establishment of a State Claims Agency Strategy Committee, containing relevant external expertise, would be of use given the specialist nature of the SCA’s business and the particular challenges faced by it. The Agency also agreed that it would be more efficient and lead to greater synergies if a combined Audit and Risk Committee were established.

The Audit Committee and Risk Committee were merged with effect from 1 February 2017. It is planned to establish the State Claims Agency Strategy Committee in mid-2017.

The Agency has adopted the Code of Practice for the Governance of State Bodies (the Code), adapted in a limited number of cases to reflect the Agency’s circumstances. A revised Code came into effect from 1 September 2016. The disclosures set out in this Annual Report and Financial Statements are in line with the requirements of the previous 2009 Code. The NTMA is reviewing its policies and procedures and has an implementation plan in place to ensure compliance with the requirements of the revised Code for the year ending 31 December 2017 and subsequent years.

Codes of business conduct are in place for Agency and committee members and employees. Agency and committee members and employees are expected to ensure that all their activities are governed by the ethical standards reflected in the relevant code.

The NTMA has a Reporting of “Relevant Wrongdoing” and Protected Disclosures Policy in place, whereby employees may, in confidence, raise concerns about possible irregularities in financial reporting or other matters.

The NTMA is a prescribed public body for the purposes of the Ethics in Public Office Acts 1995 and 2001. In addition there are specific disclosures of interest requirements under the National Treasury Management Agency Act 1990 (as amended) and the Code of Practice for the Governance of State Bodies. The NTMA has put in place procedures to assist Agency and committee members in meeting their disclosure of interest obligations.

The Agency is supported in its functions by the Agency Secretary who also co-ordinates the operation of the various Agency committees: each of the committees is supported by the Agency Secretary or the Assistant Agency Secretary.

Attendance at Agency and Committee Meetings 2016

(p) refers to the number of meetings it was possible to attend relative to the dates of appointment.

Committee Reports

Audit Committee Report

The Audit Committee assisted the Agency in the oversight of the quality and integrity of the financial statements, in reviewing and monitoring the effectiveness of the systems of internal control, the internal audit process and the compliance function, and reviewing the outputs from the statutory auditor, the Comptroller and Auditor General.

The Committee comprised three non-executive members of the Agency. The membership of the Committee at 31 December 2016 was:

• Martin Murphy (Chairperson).
• Maeve Carton.
• Susan Webb.

There were no changes to the membership of the Committee during 2016.

The Committee met on six occasions in 2016. The principal activities of the Committee in 2016 were as follows:

Financial Reporting

The Committee reviewed the financial statements prior to recommending them to the Agency. The review focused on the implementation of FRS 102 in relation to the Ireland Strategic Investment Fund and Administration Account financial statements, the consistency of approaches across the financial statements, appropriate estimates and judgements and the clarity and completeness of disclosures.

Internal Controls

The Committee reviewed the adequacy and effectiveness of the internal control systems and the statements to be included in the financial statements concerning internal controls. The Committee’s findings were reported to the Agency.

Compliance

The Committee reviewed and approved updates to a number of compliance-related policies including the Reporting of “Relevant Wrongdoing” and Protected Disclosures Policy. It received regular reports from the Head of Compliance.

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, appointed to carry out internal audit work reporting to the Head of Internal Audit). The Committee reviewed the key findings from the outcome of individual internal audit reviews completed under the 2016 risk based internal audit plan which had been developed focusing on the key risks facing the NTMA. It monitored the implementation of internal audit recommendations, approved the 2017 risk based internal audit plan and reviewed and approved updates to the internal audit charter.

Statutory Audit

The Committee reviewed the external audit plan in advance of the audit and met with the external auditor to review the findings from his audit of the financial statements. The Committee also reviewed management’s responses to the auditor’s findings and recommendations and monitored, on an ongoing basis, the implementation by management of the auditor’s recommendations.

Cybersecurity

The Committee worked closely with the Risk Committee in monitoring the NTMA’s cybersecurity, including review of the annual cybersecurity report (prepared by an external firm) which identifies cyber threats relevant to the NTMA and assesses the NTMA’s capability to defend against these threats.

Delegated Authorities

The Committee reviewed the Consolidated Delegated Authorities (the various delegated authorities from the Chief Executive across the NTMA).

Governance

The Committee reviewed its terms of reference and recommended amendments to the Agency. It undertook a review of its performance and reported to the Agency on this review.

Risk Committee Report

The Risk Committee assisted the Agency in the oversight of the risk management framework including setting risk appetite, monitoring adherence to risk governance and ensuring risks are properly identified, assessed, managed and reported.

The Committee comprised three non-executive members of the Agency. The membership of the Committee at 31 December 2016 was:

• Mary Walsh, Chairperson.
• Martin Murphy (Chairperson of the Audit Committee).
• Robert Watt.

There were no changes to the membership of the Committee during 2016.

The Committee met on six occasions in 2016. The principal activities of the Committee in 2016 were as follows:

Risk Management Policy and Framework

The Committee reviewed and recommended to the Agency updates to the Risk Management Policy and Framework which sets mandatory, high-level minimum requirements and fundamental components for risk management that apply to all business units and corporate functions of the NTMA and across all risk categories.

The Committee reviewed and approved updates to a number of specific risk policies as provided for under the Risk Management Policy and Framework: the Liquidity Risk Management Policy, the Counterparty Credit Risk Policy and the Anti-Fraud Policy. It also approved the Investment Risk Policy, the Operational Risk Management and Risk and Control Self-Assessment Framework and limits and tolerance levels in respect of the ISIF Irish portfolio.

Risk Appetite

The Committee reviewed and recommended to the Agency updates to the Risk Appetite Framework (which defines the risk appetite for each of the NTMA’s key risk categories) and monitored the NTMA’s position against its risk appetite.

Principal Risks and Risk Register Review

The Committee reviewed the principal risks faced by the NTMA based on a strategic risk assessment. It also reviewed risk registers for the NTMA’s business units.

Risk Monitoring and Reporting

The Committee oversaw further enhancements to the suite of regular risk reports as a reporting and monitoring tool and received regular reports from the Chief Risk Officer. It also approved the annual Risk Management Business Plan and reviewed the stress testing framework and other reports from the NTMA’s Risk Management function.

Cybersecurity

The Committee worked closely with the Audit Committee in monitoring the NTMA’s cybersecurity, including review of the annual cybersecurity report (prepared by an external firm) which identifies cyber threats relevant to the NTMA and assesses the NTMA’s capability to defend against these threats.

Governance

The Committee reviewed its terms of reference and recommended amendments to the Agency. It undertook a review of its performance and reported to the Agency on this review.

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. CEO, Enterprise Ireland.

John Herlihy (external member) resigned from the Committee with effect from 1 May 2016. Brendan McDonagh (Chairperson) resigned from the Committee with effect from 6 October 2016. Mark Ryan was appointed to the Committee with effect from 18 July 2016. Susan Webb, previously a Committee member, was appointed Chairperson with effect from 29 November 2016. Gerardine Jones was appointed to the Committee with effect from 29 March 2017.

The Committee met on 12 occasions in 2016. The principal activities of the Committee in 2016 were as follows:

Review of Investment Proposals

The Committee reviewed 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 investment pipeline in order to provide timely feedback to management on potential investment opportunities.

Investment Strategy

When the ISIF’s initial investment strategy was adopted in 2015, it was agreed that the strategy would be formally reviewed after 18 months. This review commenced in the second half of 2016. The Committee has provided advice in relation to the review. This work was ongoing into 2017.

The Committee also put in place formal measures for monitoring the implementation of the investment strategy on a six monthly basis and reviewed the Fund’s benchmark. It noted that a 4% benchmark target return was still appropriate at Fund level.

Sustainability and Responsible Investment

The Committee reviewed the ISIF Sustainability and Responsible Investment Policy and recommended it to the Agency.

Portfolio Diversification

The Committee reviewed the ISIF Portfolio Diversification Framework (PDF) and agreed that the investment limits and tolerance levels set out in the PDF be submitted to the Risk Committee for approval.

Portfolio Monitoring and Review

The Committee received regular reports from management on the performance, asset allocation and economic impact of the Fund. It also commenced formal quarterly review of the performance of individual ISIF investments in Ireland.

Governance

The Committee reviewed its terms of reference and recommended amendments to the Agency. It undertook a review of its performance and reported to the Agency on this review.

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 four members appointed by the Agency:

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

Brendan McDonagh served as Chairperson of the Committee until he resigned as a member of the Agency with effect from 24 October 2016. Maeve Carton was appointed to the Committee as Chairperson with effect from 29 March 2017.

The Committee met on two occasions in 2016.

The principal activities of the Committee in 2016 were as follows:

Remuneration

The Committee approved a formal Remuneration Policy to define the parameters within which the Chief Executive and management may operate to recruit and retain high calibre employees and encourage a high level of performance by staff, while complying with applicable law, reflecting good corporate governance and being consistent with, and promoting, sound and effective risk management. The Committee reviewed and approved the total amount in performance related payments to be made in respect of 2015.

Appointments

The Committee reviewed a shortlist of candidates for the external member vacancy on the Investment Committee which occurred during 2016 and made a recommendation to the Agency on the filling of this vacancy. The Committee also provided support and assistance to the Chairperson in the carrying out of his role with regard to the vacancy in Agency membership which arose during 2016 and was filled under the Public Appointments Service assessment process to support the relevant Minister in making appointments to State Boards under his/her remit.