Friday 18 August 2017

Greater transparency in management of third-level accounts called for - PAC report

NUI Galway
NUI Galway

Katherine Donnelly Education Editor

The Public Accounts Committee (PAC) has called for greater transparency in the management of the financial accounts of third-level colleges.

It comes in a hard-hitting PAC report that is critical of how colleges spend public funds and run aspects of their affairs.

The high-powered Oireachtas body has taken colleges to task over a range of issues including unapproved severance payments, how they deal with whistle-blowers and delays in presenting annual accounts.

PAC has also raised question about compliance with procurement practices, lack of transparency around fund-raising foundations and trusts, and whether colleges are getting a proper return for their investment when companies developed on campus are sold on.

The committee details these and other concerns in a report published following a series of hearings in recent months into the financial affairs of a sample of seven third-level colleges covering 2013-14 and 2014-15, and a review of other   information. 

The colleges involved in the hearings were the University of Limerick, (UL) University College Cork (UCC) NUI Galway, Dublin Institute of Technology (DIT), Waterford Institute of Technology (WIT), Cork Institute of Technology (CITY), and Dundalk Institute of Technology (DkIT). 

Committee chair, Seán Fleming said PAC was particularly disturbed by the practice that sees many colleges fail to furnish their accounts to the Comptroller and Auditor General (C&AG) on time.

The report singles out the National College of Art and Design (NCAD) and NUI Galway for particular criticism, stating that their delay in presenting accounts, 37 and 26 months respectively, is “a major failure of corporate governance”.

In one of its main recommendations, PAC is calling for colleges to be fined if they have not submitted their accounts within six months of the end of the financial year.

The committee also calls for a more powers and resources to be given to the Higher Education Authority (HEA) to strengthen its oversight role.

Mr Fleming said they “expect the Department of Education and Skills, the HEA and the third-level institutions to act on the Committee’s recommendations.”

The third-level sector received about €1.6bn in State funding annual, although colleges are increasingly reliant on non-Exchequer income to deliver their services.

One PAC focus was the commercialisation of intellectual property, including the  polices and procedures to manage conflicts of interest in campus spin-out companies  and the return on the taxpayers’ investment.

Three colleges had sold spin out companies but PAC said it would not assess whether the institutions’ share of the proceeds at the time of disposal represented value for money because of an absence of routine monitoring and lack of information.

Among the examples cited is a Waterford IT company, FeedHenry, for which the college’s share was deemed to be 2.3pc at the time sale.

“Significant public funds are involved in developing Intellectual Property projects to the point of commercialisation through spin out companies., With typical returns of 1 or 2pc on sale of spin out companies there is uncertainty about how much  of the development costs are recovered”,  the report states.

Among PAC’s recommendations is that the HEA puts a system in place to monitor and quantify research and administration resources consumed on such projects.

On procurement, PAC found that five of six colleges examined under this heading had instances of non-compliant expenditure in 2013-14, to the total value of €8.9m.

There were some significant amounts of spending, including €5.1m by DIT and €616,000 by UCC, which did not result from competitive tendering processes.

In 2014-15 DKIT had six examples on non-compliance and the committee criticised as “excessive” its 15-year relationship with a student recruitment agency in China - its sole supplier - with no evidence that the 20-25pc fee charged by agents represented value for money.

In relation to delays of between 12 and 27 months in colleges producing annual financial statements, PAC states that it is “unacceptable that the Department of Education and Skills and the HEA continue to fund these institutions on an annual bases without sight of up-to-date audited accounts.”

The report also calls for greater transparency and accountability relating to foundation and trusts established by third-level colleges to manage philanthropic and other donations from individuals and organisations. According   to the report, only Trinity College Dublin and Maynooth University currently consolidate these results into their financial statements.

PAC also probed allegations relating to financial matters made by whistle-blowers in UL and NUIG, and, according to the report, it remains “deeply concerned that that the infrastructure in places in third-level colleges may not be sufficiently string or established to support those who make protected disclosures”.

 

Other college specific issues in the report include:

*bank borrowings of €20m by UCC to buy the  Irish Management Institute last year with no evidence that “the purchase price represented value for money.”

* following a tax settlement  of €184,926 made by UL  in relation to staff sabbatical payments, PAC said  it is “quite possible that other third-level institutions  may not be fully tax compliant in regard to their arrangements” and calls  on the HEA to conduct  a review of practices

* severance payments  worth  more than €200,00  each made to two staff at UL – one of whom was re-engaged as a consultant -   “in  breach on the of a “clear requirements to obtain prior approval of the Department of Education and says the Department of Public Expenditure should  issue  or amend written guidelines on the process to be followed

* PAC “shock”  and “dismay” at the loss of €700,000 by DIT when a  library service, for which it prepaid,  went out f of business and it calls for arrangements across the sector to ensue approval for advance payments when significant sums are at stake

* the use by  Cork IT for engaging  its audit committee, rather than the HEA, to set the terms of reference for an independent review of anonymous allegations and also questioned the “business purposes” of expenditure ofr€22,000 on two commissioned portraits of the college’s president and chairman

 

The committee also expressed concern about the under-representation of women among academic and support staff in higher education.

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