Five community groups lost State funding last year
Money held back over 'major concerns'
Published 02/01/2011 | 05:00
FIVE community groups lost State funding last year because of "major concerns" about how they managed their finances.
The funds were terminated following audits of the community groups by Pobal, the agency that allocates State funds to community groups on behalf of the Government.
The audit reports, released under the Freedom of Information Act, found issues ranging from poor financial controls to potential conflicts of interest.
The groups included a local radio station, a gay and lesbian organisation, a parent support group and a rural transport scheme, as well as the Dublin Inner City Partnership, which was in the headlines last year for paying excessive salaries to senior staff.
Auditors were concerned about a conflict of interest at the National Association for Parent Support Community Services (NAPSCS) in Laois. The group provides classes and child support in Co Laois and received funds of more than €400,000 in Community Services Programme funding in three years.
The audit noted that the manager of the support group and her son bought a building, which they then leased to the group for a monthly rent.
It noted that the manger's son was a treasurer of the group, and he was also related to two of the State-funded employees who worked for it, while the manager was related to one of them by marriage.
The manager and her son bought the building in 2007 and leased it to a parent company, which in turn leased it back to NAPSCS for a monthly rent of €1,000. The total rental income in their joint account up to June 2009 was €41,057, while the mortgage payments were to €36,291, leaving a surplus of €4,766, according to the report.
Auditors found "no evidence that the board approved the leases and the minutes did not satisfactorily record how the potential conflict of interest issues were dealt with in light of the close family connections associated with the new premises".
The manager told the auditors that the mortgage was initially applied for in the name of a related NAPSCS company, but because of complications, loan approval was eventually granted in the name of herself and her son.
They bought the property on a 'not-for-profit' basis for the benefit of NAPSCS and they had never intended to generate a surplus on the rental income.
Pobal noted that, at one point, the support group paid for the mortgage protection insurance on the property "as opposed to the actual mortgage holders", a sum of €1,728.
NAPSCS said this weekend that it disputed the audit's findings and took "grave exception" to the inference of a personal gain involved in the property.
The group continues to operate on a voluntary basis without State funds.
A rural transport scheme in Co Cavan was found to have "completely ineffective" financial management procedures, according to an audit report in 2009. Rural Lift Ltd, a 'not-for-profit' company that received more than €900,000 in State funds, was set up to provide free and subsidised transport in the rural border counties.
An audit in 2009 led to financial concerns including "conflicting" accounting records. In one instance, a set of records put donations collected in 2008 as €5,768 while a second set of records put the figure at €10,038.
The "deficiencies" in financial management "could potentially fail to prevent the misappropriation of funding", the audit reported, and found it a matter of "grave concern" that both the manager and the treasurer had indicated that they "had no confidence" in the financial records.
A spokeswoman for Rural Lift said that although the voluntary group had lost State funding, it remained committed to the need for rural transport and co-operated fully with Pobal's audit.
Another group to lose its State funding, West Limerick Community Radio, ran up substantial debts and displayed "totally unsatisfactory" financial controls. It accumulated debts of €278,245, including a €143,000 AIB loan, Vat of €7,000 and trade creditors who were owed €68,000.
The audit noted that in one instance the group claimed €1,375 from the Community Service Programme for installing a network service, even though there was no real cost involved, as the work was done by a staff member as part of his regular duties.
Its articles of association stated that directors should not receive payments, except for out-of-pocket expenses. But the audit said one board member was also paid €5,000 in 2009 for accountancy fees.
Board member William O'Regan said the community station had since tackled its financial problems, secured tax clearance and turned a small profit.
The Cork Lesbian and Gay Community Development Project Ltd was also criticised for not maintaining records, and for appointing one of its own directors to the position of caretaker of the centre, a position funded by the Community Services Programme.
The audit identified "significant weaknesses" and a "strong indication" that the organisation "has not demonstrated an appropriate level of responsibility" with regard to the public funds.
The project included a cafe, but Pobal said the group did not maintain accounting records to show exactly how its income was spent.
The high-profile closure of Dublin Inner City Partnership last year followed revelations that three staff members were paid more than the maximum allowable.
The manager was paid €120,175, €9,552 above the salary approved by Pobal, while the financial administrator and a regeneration officer were paid about €5,000 more.
Pobal said it had "terminated" its contracts with each of the groups. The State agency funded 4,500 groups in 2009 and conducted 600 audits and inspections.