A predominantly State-funded company set up to tackle poverty in Galway made payments to contractors without receiving invoices, breached public procurement rules and did not regularly maintain accounting ledgers, an internal audit found.
Auditors found Galway City Partnership’s accounting system “may not be fit for purpose” and identified several weaknesses, which it said risked exposing the organisation to financial loss.
The community development company, based in Galway city, runs a number of programmes to support disadvantaged communities and tackle unemployment. It is mostly funded by grants from Government departments.
An internal audit, completed in February 2020, found a number of serious weaknesses in the organisation’s financial controls.
The company’s general accounting ledgers were “not maintained on an ongoing basis”, and discrepancies between spending and allocated budgets were not tracked, it said.
One supplier had been providing services to the company for a number of years, “bypassing procurement procedures”, the audit said.
In two other cases contracts for research were awarded “bypassing any quotation process”, it said.
Contracts
Where public funds are involved, contracts worth more than €25,000 must be put out to a competitive tender process, where suppliers can bid for the contract.
In cases below that threshold organisations are required to seek quotes from a number of suppliers before awarding a contract.
The audit found Galway City Partnership was not keeping a ledger tracking the value of ongoing contracts, to ensure none went above the limit requiring a tendering process.
“Usage of the accounting system in Galway City Partnership may not be fit for purpose,” the auditors said.
The internal audit, conducted by Crowleys DFK accountants, also criticised instances where payments were made without invoices being received.
In response, Galway City Partnership told the auditors the payments “were part of a research contract and as such no invoices were received”.
However, the auditors noted: “There is no audit trail to confirm that the services paid had been rendered prior to payments, or that due consideration had been given prior to approving the payments.”
In another instance, a credit card requisition form was requested and approved by the same person, the audit found.
The internal audit was released to The Irish Times following a request under the Freedom of Information Act.
High-risk weaknesses
The report identified five high-risk weaknesses and concluded assurances that could be placed on the company’s financial controls were limited.
“Our assessment noted weaknesses in Galway City Partnership design and operation of internal controls. These weaknesses may potentially expose the entity to risk, or result in a financial loss,” the audit said.
“Our review noted that accounting ledgers are not maintained on a regular or timely basis. As a result, available information to confirm compliance to industry regulations are limited,” it said.
The audit was undertaken to provide assurances as the company was the provider of a local social inclusion programme, funded by the Department of Rural and Community Development.
Declan Brassil, Galway City Partnership chief executive, said it had agreed a number of actions following the audit, which were now in place.
The company, which received €1.9 million in State funds last year, was in compliance with procurement guidelines, he said.
“All audits, by their nature, find some issues and we welcome recommendations made as we continuously seek to improve on our systems,” Mr Brassil said.
