A unpublished report has expressed concern over millions of euro paid out to a charity to monitor the compliance of childcare providers.

The monitoring is of childcare providers that are taking part in the Government's free pre-school year scheme.

Internal auditors at the Department of Children found it "extremely difficult to support the annual fee of €2.5m" paid by the department to Pobal, to carry out the checks.

The report was obtained by RTÉ's This Week.

The auditors noted that Pobal's fee was calculated as a percentage of the overall cost of the programme.

This meant that as the programme costs were increased so did Pobal's fee. 

The auditors said it appeared that Pobal were paid more than €250,000 per each inspection officer.

Fianna Fáil's children spokesman Robert Troy said that the report raised "serious concerns over the value for money, in particular over the €2.5m fee paid to Pobal". 

The auditors also raised concerns over a possible conflict of interest. 

They said that compliance visits were mostly carried out by Pobal's team of regional development co-ordinators.

Regional Development co-ordinators are already heavily involved in providing a wide range of mentoring supports to childcare providers.

The auditors said that the use of these staff "risks significant conflict of interest, or at least a subconscious loss of objectivity, in carrying out the compliance visits".

The auditors said: "It is best practice that audit related functions should be carried out by persons that are independent of other operating responsibilities."

CEO of Early Childhood Ireland Teresa Heeney, which represents around 3,300 childcare providers, said the conflict of issue raised in the report needed to be addressed.

She said: "Pobal are running a lot of programmes for the DCYA at the moment... how you can possibly roll all those things out with the same personnel certainly does have to be examined in detail."

The auditors also take issue with the information shared between Pobal and the department, in relation to compliance visits.

They identify omissions, inconsistencies and inherent deficiencies in format and content and the timing of data being shared between Pobal and the department.

"The medium and contents (of Pobal's reports) prevent the Department of Children from efficiently following up" on issues raised in compliance visits, they said.

As a result of the agreed reporting mechanisms, the department was often working with year-old data, the auditors said.
The Department of Children accepted the findings of the audit team, but said that it intended to press ahead with extending the role played by Pobal in the administration of both the pre-school year and other DCYA programmes later this year.

Pobal describe themselves as a not-for-profit agency, with charitable status.

They provide mostly administrative services to government departments for a fee.

Their fee income for 2011 was just over €14m and €6m of that was paid out by the Department of Children.

In a statement, Pobal said that it had fully co-operated with the audit and was working with the department to implement any changes arising from it.

The department said it had obtained advice that the contract with Pobal complied with EU law.

However, they acknowledged that an action plan to implement recommendations contained in the Internal Audit report was in the process of being implemented.

It said that this was now being led by the internal audit team within the department.