A predominantly state-funded company set up to fight poverty in Galway made payments to contractors without receiving invoices, broke public procurement rules and did not keep regular books, according to an internal audit.
The auditors found that the Galway City Partnership’s accounting system “may not be fit for purpose” and identified several weaknesses, which they said risked exposing the organization to financial loss.
The Galway City-based Community Development Company runs a number of programs to support disadvantaged communities and tackle unemployment. It is mainly financed by grants from the ministries.
An internal audit, completed in February 2020, revealed a number of serious weaknesses in the organization’s financial controls.
The company’s general ledgers were “not kept up to date on an ongoing basis,” and variances between expenses and allocated budgets were not tracked, he said.
One supplier had been providing services to the company for a number of years, “bypassing procurement procedures,” according to the audit.
In two other cases, research contracts were awarded “bypassing any quotation process,” he said.
When public funds are involved, contracts worth more than € 25,000 must go through a competitive bidding process, where suppliers can bid for the contract.
In cases below this threshold, organizations are required to request quotes from a number of suppliers before awarding a contract.
The audit found that Galway City Partnership did not keep records to track the value of outstanding contracts, to ensure that none exceeded the limit requiring a tendering process.
“The use of the Galway City Partnership accounting system may not be fit for purpose,” the auditors said.
The internal audit, conducted by Crowleys DFK accountants, also criticized instances where payments were made without invoices being received.
In response, Galway City Partnership told listeners that the payments “were part of a research contract and therefore no invoices were received”.
However, the auditors noted: “There is no audit trail to confirm that services paid were rendered prior to payments, or that proper consideration was given before approving payments.
In another case, a credit card application form was requested and approved by the same person, according to the audit.
The internal audit was disclosed to The Irish Times following a Freedom of Information Act request.
High risk weaknesses
The report identified five high-risk weaknesses and concluded that the assurances that could be placed on the company’s financial controls were limited.
“Our assessment identified weaknesses in the design and operation of the Galway City Partnership’s internal controls. These weaknesses can potentially put the entity at risk or lead to financial loss, ”the audit said.
“Our review found that the ledgers are not kept regularly or in a timely manner. As a result, the information available to confirm compliance with industry regulations is limited, ”he said.
The audit was carried out to provide assurances as the company was the provider of a local social inclusion program, funded by the Department of Rural and Community Development.
Declan Brassil, chief executive of the Galway City Partnership, said he had agreed to a number of actions following the audit, which were now in place.
The company, which received € 1.9 million in public funds last year, was in compliance with procurement guidelines, he said.
“All audits, by their nature, detect certain problems and we welcome the recommendations made as we continually seek to improve our systems,” said Mr. Brassil.