"What is it that's happening here?" isn't incorrect, but it is unnecessarily wordy.
The presence or otherwise of the é is probably a dialect thing - some dialects would include it, some wouldn't.
For example, the NEID gives 4 different suggestions for "What's Up?"("What's the matter?") with céard, cad and cad é examples:
céard atá ort?
cad atá cearr?
cad é atá contráilte?
cad é atá ag cur as duit?