AN internal audit at Enterprise Ireland has warned that there is a serious need to address the "substantial staff losses" arising from the impact of the ban on recruitment and promotions.
The report claimed the agency had lost more than 16pc of its staff since 2009. It said the most serious risk to Enterprise Ireland's effective operation is a shortage of staff and skills resulting from continuing staff losses.
The audit, seen by the Irish Independent, said the situation was unsustainable without "major re-engineering of processes".
A spokesman said the agency, like all government departments, had been affected by the moratorium and was in talks with the Department of Jobs and Enterprise over its staffing levels.
"We recently received sanction to recruit an additional 20 people for our overseas offices and to fill two senior management positions," he said.
"Like our clients, we are constantly striving to do more with less and innovate with regard to the way we do business.
"Enterprise Ireland has always evolved to meet the needs of our clients by introducing new offers and services such as competitive start funds.
"This requires staff to take on new roles on an ongoing basis to effectively respond to client needs."
Enterprise Ireland is the agency responsible for the promotion of Irish firms in world markets and driving exports.
Companies receiving Enterprise Ireland support achieved record exports in 2012 at €16.2bn, up from €15.2bn in 2011.
But the concerns about staffing levels will stoke fears that the agency's hard-won gains could end up being stifled by the impact of cutbacks.
The report said that Enterprise Ireland has been able to maintain its output levels because almost a quarter of staff had changed roles since the moratorium began.
But it warned that staff were being redeployed into vacant roles for which they have limited experience.
And it said that the ongoing departure of senior and middle- ranking staff represented a "loss of intellectual property".
"A wealth of knowledge and experience is being lost without the capacity to promote replacements."
Maternity leave is no longer covered and further losses are expected due to retirements.
"This is no time for Enterprise Ireland or the Government to be easing off on support for exporters and attracting new investors to Ireland," he said.
"We are all aware of the budgetary constraints but the Government has not spent all of the money earmarked for the Jobs Initiative on creating jobs and there is no sense in cutting back on job creation."