Audits reveal Enterprise Ireland problems

Monday 02 December 2013 14.25
Internal audits reveal problems in Enterprise Ireland which agency says are being addressed
Internal audits reveal problems in Enterprise Ireland which agency says are being addressed

Enterprise Ireland's internal auditors have criticised the State agency for allegedly lacking transparency and for conducting inadequate assessments of companies bidding for multi-million euro job support schemes.

In one case, the State agency was found to have provided financial support to a company on condition the firm created employment in the Kilkenny area, but a number of the jobs ended up being created in Australia and Bulgaria without Enterprise Ireland's knowledge.

The agency was also criticised for failing to conduct an adequate baseline study of employment before awarding job expansion grants, calling into question whether some jobs created under the €6m fund constituted new employment or not.

The three internal audit reports were obtained by RTÉ under the Freedom of Information Act.

In one €1.3m scheme aimed at linking graduates and companies, the unpublished report found "the approach to scoring applicant companies lacked transparency and was poorly structured and controlled".

There was a "requirement for increased level of monitoring and control, particularly in relation to public procurement", it added.

The scoring system (for host company applicants) was "not sufficiently structured, monitored and controlled to ensure transparency, consistency and accuracy"... leading to a "risk of challenge by unsuccessful applicants," the internal audit team concluded.

Auditors found "several instances where relatively low scoring applicants were successful and where some high scoring applicants were rejected. There were no documented reasons recorded for such decisions".

In another report, the auditors examined a fund which supported feasibility studies for companies in the southeast region.

That audit identified a number of "companies which had received approval for grant aid without fulfilling the conditions laid out in the scope of the scheme."

"Evaluation documentation for awarding scores to applicant companies was inadequate, failed to address fundamental requirement of the scheme and was not signed off by the evaluation team"

The report into the pilot scheme said it was "administered without sufficient adherence to the eligibility criteria laid out in the documentation governing the scheme".

There was a "lack of transparency (in the scoring system) which leaves outcomes open to challenge".

The largest-budget scheme which the auditors examined was the Job Expansion Scheme, which provided just under €6m in funding to more than 50 companies in 2012.

In relation to a small number of jobs which were supposed to be based in Kilkenny, but which ended up being based in Bulgaria and Australia, the audit team noted that "no proof of location of employee was sought or confirmed."

And in relation to the awarding of grants under the scheme generally, they said there was "no formal systematic methodology in place to determine baseline employment. It was therefore difficult to be confident that grants claimed for new employees did not refer to staff who were already on the payroll."

This led to a "risk of ineligible claims being paid," the auditors said.

All three reports were conducted as part of Enterprise Ireland's programme of scheduled audits up to May 2013.

Call for full response

Speaking on RTÉ's This Week programme, Fianna Fáil's Dara Calleary said he intended to raise the contents of these reports in the Oireachtas.

"What we need is a full response from Enterprise Ireland in relation to this. I will be raising it at the Enterprise Committee this week and I will also be referring it to my colleague John McGuinness in the Public Accounts Committee. Enterprise Ireland need to give a full response to this.

"As I have said, they are a very strong company. They have been very successful in very difficult conditions. But this gives an idea that somebody has dropped a ball here and it needs to be addressed quickly." he added.

Enterprise Ireland said that the audits had been completed under the State agency's own planned series of audits, and that they were carried out as part of a process to ensure client companies got the best service.

The agency said that it had now implemented new guidelines in relation to conducting baseline employment studies, arising from the audit.

It also said that any money owed by companies which located jobs outside of a designated area would be recovered.

The State agency said that the scheme which delivered feasibility study funding in the southeast had been a pilot project from which lessons were learned before placing it on a regular footing. 

Paul Davis, a procurement expert and lecturer at Dublin City University's school of business, said the three reports raised alarm bells.

"I think there's a risk the organisation would show up with reputational damage. It would show up a lack of trust in whether they had the ability to manage these sort of schemes. I think these are isolated reports but if you put them together then maybe the conclusion would be that there is a lack of skills, or a loss of skills in the particular organisation, and this may be leading to systemic problems that are occurring".

Mr Davis said that problems identified in Enterprise Ireland could be found across public sector agencies.

Earlier this year RTÉ's This Week programme revealed that internal auditors at Enterprise Ireland were also concerned that the agency was struggling to cope with the impact of the moratorium on public sector recruitment.

They studied the impact of the hiring ban and found that many staff within the export support agency had been moved into new roles with little or no training. Enterprise Ireland said it had been given approval to recruit 20 new posts.

Keywords: enterprise ireland