Irish News

Tuesday 22 July 2014

Rehab was told 18 months ago to cut lottery costs

Published 30/01/2014|02:30

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Minister for Jobs, Enterprise and Innovation, Richard Bruton, T.D., with Angela Kerins, Chief Executive, Rehab Group before the annoucement that Rehab Group plans to recruit 750 staff in its operations over the next three years, with over 400 of those to be based in Ireland. Pic credit; Damien Eagers 16/5/2012
Angela Kerins, Chief Executive, Rehab Group

REHAB was warned more than 18 months ago to cut the costs of its lottery scratch cards after only €10,000 profit was generated from €4m sales.

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The full costs of running the instant-win lottery are revealed in an internal audit carried out by the Department of Justice, and seen by the Irish Independent.

Justice Minister Alan Shatter provoked a storm of controversy last week when he set out the "low profit margins" coming from lottery products run by the organisation.

The minister was quoting from the internal audit conducted by the department, which found the "Rehab lottery has high costs".

The report stated gross lottery scratch card sales of €3.969m was reduced by prizes of €2.611m and other costs of €1.348m.

After costs were taken out, there was a "net surplus of €10,000".

The Lottery scratch cards costs were made up as follows:

* retail commission: €413,000.

* payroll costs: €230,000.

* ticket printing costs: €90,000.

* agents' commission: €85,000.

* storage: €23,000.

* post: €23,000.

* legal: €30,000.

* premises: €39,000.

* audit: €24,000.

* IT: €26,000.

* depreciation: €18,000.

* others: €338,000.

"Audit finds that while the nature of all costs associated with the generation of Lottery Sales in Rehab is relevant, the amount of costs represent a significant percentage of overall sales revenue leading to a low profit margin," the report says.

The finding led to a "high" priority recommendation from the department.

It said: "Internal audit recommends that Rehab review all aspects of the fundraising scheme to determine its viability and to address the level of costs. Rehab must seek to increase the surplus on lottery sales through a reduction in associated costs."

The audit made a number of recommendations to be implemented "as soon as possible":

It wanted a funding contract to specifically state the deliverables, the reporting and monitoring processes in place.

And it asked for allowable costs and the specific use of funds to be clearly defined and agreed annually.

Rehab has defended the operation and costs of its lotteries. It has been locked in a legal battle with the State over the ending of the Charitable Lotteries Fund, claiming it will do irreparable damage to the organisation and affect services to people with disabilities.

And Rehab expressed "considerable surprise" last week when Mr Shatter made comments in the Dail "on matters that are clearly pending before the courts".

The organisation said it was an abuse of his position and a serious undermining of the judicial process.

The report on the "Charitable Lotteries Fund Rehab" was carried out by an official in the Internal Audit Unit of the Department in May and June 2012.

Fionnan Sheahan, Group Political Editor

Irish Independent

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