An unpublished internal report finalised earlier this year found that the Department of Communications, Climate Action and Environment lacked adequate corporate control and oversight over the Sustainable Energy Authority of Ireland (SEAI).
The Department had "no formally written contract or agreement" with the SEAI, despite providing almost €70 million in annual funding to the state advisory agency, according to a copy of the report, which was obtained by RTÉ's This Week programme.
Reacting to the report, Minister for Communications Denis Naughten told RTÉ that he was "surprised" to learn that no formal agreement had been in place between his department and the SEAI.
Minister Naughten said he had asked for an explanation as to why no such written agreement was in place but he said he was still "awaiting answers" from his officials to explain why it had not been signed, despite a draft being under consideration for several years.
He described the lack of a formal written contract with the agency and the department as a "huge weakness".
He said that he has sought a briefing from his officials to explain whether any other agencies under his remit had similar oversight issues.
The internal audit report obtained by RTÉ did not make any direct criticism of the SEAI nor did it examine how the sustainable energy advisory body used its funds.
The audit examined the Department's corporate oversight of the agency, which it found to be deficient and "high risk".
It found that there was good monitoring of funds at programme level but deficient overall oversight of funding at a higher level.
It also found that a draft SLA being considered by the Department needed significant strengthening.
The audit further found that the civil servant who served on the board was answerable to the SEAI rather than to his own department or the minister, leading to "limited" information on the activities of the board being communicated back to the Department, and that there was a lack of oversight of the draw-down of funding.
The Department said it had accepted the findings of the report in full. They said they have now put in place a full Service Level Agreement with the SEAI, as well as having made numerous other corporate governance changes to bring it into line with code of governance rules for the oversight of state bodies.
Commenting on the report, Professor Niamh Brennan, UCD corporate governance expert, said that the thorough examination carried out by the internal audit unit was, in itself, a sign of good corporate governance.
She said the report showed that a service level agreement between the department and SEAI should have been in place and that at a new code of governance for the oversight of state bodies, which came into effect last week, on 1 September, sets out a clear road map for government departments in terms of the level of oversight and control which they are now required to have over state bodies under their ambit.