Although there were some residual control weaknesses and one case where a student continued on Youthreach until determined to be ineligible in 2012, we found that the controls over assessment of eligibility had generally operated as intended at Macroom Youthreach centre in the academic year 2011-12. We found no evidence of the weaknesses that had occurred in Macroom being replicated at other Youthreach centres when further samples of files were examined as part of the audit of County Cork VEC or other VECs. Nevertheless, I have recommended that the Department should review its guidelines in relation to Youthreach to clarify the limits of discretion available to co-ordinators to admit students to the programme on an exceptional basis, and how such exercise of discretion should be documented.
An internal audit report by the Vocational Support Services Unit, VSSU, completed in August 2010 identified a number of weaknesses regarding payments to staff at the Macroom Youthreach centre. It was estimated that the VEC paid for 1,070 tuition hours in the academic year 2009-10, estimated to cost €60,000, where teachers were not timetabled to teach. The VEC had also paid part-time teachers for an additional 500 non-teaching hours used for administrative work associated with the centre at an estimated cost of approximately €25,000 for the academic year 2009-10. Payments were made to two part-time staff without deduction of PAYE and PRSI. In addition, it appeared that two individuals in receipt of a student allowance were not attending training but were in fact employed to provide English language tuition. The audit of County Cork VEC's financial statements for 2011 and 2012 examined payments to staff, including in Macroom Youthreach, and no continuing issues of concern were noted.
The Vocational Educational Act 1930 requires a VEC to obtain sanction from the Minister prior to entering a lease. In 2012, an internal audit in the VEC raised concerns about two leases entered into without obtaining the required sanction and recommended that the VEC conduct a review. This identified six further leases where sanction had not been obtained as required. The position in relation to seven leased buildings has now been regularised by way of retrospective sanction granted by the Department between November 2012 and May 2014.
One of the unsanctioned leases related to a 15-year lease agreement for a building in Mallow entered into in 1996, with an option to purchase the building in 2011, at the end of the lease, for a nominal sum. When it was applying for grant funding of €1 million towards the construction cost of a crèche in the building in 2008, the VEC entered into a revised lease agreement. Grants for crèche facilities would not have been payable for investment in a building on a short lease. As a result, the term of the lease was extended to 2031, and the VEC became legally committed to additional lease payments of €431,700 as a result. Subsequently, further revised arrangements provided for the cessation of lease payments with effect from 1 January 2012 and the transfer of ownership of the building for a nominal sum, as provided for in the original lease. This removed the obligation on the VEC to make the extended lease payments.
In 2010, the VEC also entered into a 99-year lease, committing itself to costs of €20,000 a year over the term of the lease in the form of four annual scholarships. In return, the VEC secured the use of a site with an area of 0.9 ha adjacent to a marine outdoor education centre in Schull. No analysis was undertaken to compare the projected cost of the scholarships with the likely benefits. The lease arrangement was terminated in August 2013 by mutual agreement with the landowner. The incurred cost of the scholarships amounted to a total of €40,000, and the VEC had the use of the site for four years.
A number of other issues were also identified in relation to County Cork VEC. Between 2010 and 2013, legal settlements amounting to €111,600 were made by the VEC from its own funds. The VEC’s insurers made further settlements, amounting to €95,000, in respect of 23 cases and incurred legal costs of €120,000. In addition, legal costs incurred by the VEC amounted to €442,200 for the four years 2010 to 2013, significantly above the VEC sector average. A further case was settled by the ETB in 2014 and included compensation of €10,000 and arrears of salary for 11 years amounting to €168,000.
In 2002, the VEC accepted a gift of a boat called the Omar B and used it as part of a sailing training programme. The boat has been in dry dock storage since 2007, at a total cost of €10,700.
The VEC had a long-standing arrangement with a voluntary body providing services to people with disability whereby the VEC provided funding in lieu of teaching hours. The arrangement was in breach of departmental guidelines in relation to the operation of such arrangements. The funding provided was based on a specified number of training hours using VEC pay rates for an unqualified part-time teacher whereas the actual pay rates in operation in the voluntary organisation were significantly lower. The grant to the voluntary body in 2011 was just under €93,500. The Vocational Support Services Unit, VSSU, estimated that, if funding had been provided based on the cost of the teaching delivered, as required by the Department’s guidelines, the grant would have been lower by €49,000.
Finally, a tax audit of County Cork VEC by the Revenue Commissioners resulted in a settlement of €115,700 in June 2013. The settlement included a number of tax categories and related to tax periods as far back as 2003.
Some of the control issues outlined in correspondence about County Cork VEC were present in 2011 and 2012, while other matters had been corrected. The ETB has since taken action to regularise transactions or to terminate arrangements in order to address the remaining issues. The audit of the final financial statement of the VEC for the period to the end of June 2013 has been completed and no significant ongoing control lapses were identified.
