Education and Training Boards whose annual budget exceeds €2 billion are operating with inadequate financial reporting controls that are cumbersome, difficult to follow, and do not comply with up-to-date accounting practice, the state's financial watchdog has found.
The review by Comptroller and Auditor General Seamus McCarthy entitled "Financial governance and reporting in education and training boards" also highlights insufficient internal audit resources, inadequate financial training for board members, along with poor attendance at meetings by some members.
The CAG review notes that in 2018, over half of the €2.095 billion budget of the ETBs went on payroll costs for their 32,000 employees.
Most of that funding emanates from the Department of Education and Solas.
However, while the rationalisation of 33 Vocational Education Committees into 16 ETBs has been ongoing for over six years, the CAG says progress has been "slow" in streamlining reporting arrangements and developing ICT systems to facilitate enhanced oversight by the Department.
"Given the scale of operations of the ETB sector, and the very significant changes in their structure and responsibilities, a review of financial management by ETBs was considered timely," the review states.
Within the 5 sample ETBs assessed regarding financial governance and leadership, financial monitoring and forecasting, the CAG notes that ETBs currently operate "largely on legacy financial systems which are inadequate for organisations of their size and complexity".
"The accounts are largely cash based, and important information, for example, the value of assets owned is not included," according to Mr McCarthy.
He also finds "inconsistency" between the boards regarding the most appropriate level of financial maturity, as varying levels of maturity were considered appropriate.
The CAG describes the level of internal audit resources available to ETBs as "limited" for organisations or their size and complexity.
"The insufficient staffing complement was compounded by the inability of the ETBs' internal audit unit to recruit and retain staff," he says, noting that while staffing in that audit unit rose from 4 to 9 in 2018, it now also had to take on the additional audit function for the City of Dublin ETB.
"Little progress has been made on developing appropriate financial systems including the development of ICT systems for ETBs on a 'shared services' basis," Mr McCarthy says.
The review documents poor attendance at board meetings by some members.
"There are 21 members on each ETB board and even though meetings are held consistently with a quorum (i.e. 12 or more members), full attendance is not happening. In some instances, non-attendance at meetings over a consecutive period of six months has triggered automatic resignation," the CAG states.
He also highlights that while training was given to board members in 2017, "...financial management was not a significant part of the training provided".
The review reveals that board members often receive large volumes of information which is "difficult to navigate" - though financial information included in those board papers "is typically a one-page document which does not include any narrative information to explain the figures therein".
The CAG acknowledges that there have been some improvements in the disclosure of properties, and that by last June, the Department had put in place performance delivery agreements with each ETB setting out core services to be delivered in the year in question.
He also cites the Department's belief that moving to financial management shared services will support better financial reporting arrangements.
His review also identifies some instances of good practice in financial governance and reporting systems in the sampled ETBs, which would improve financial governance and reporting practices if applied across the sector.
Welcoming the ETB report, the Minister for Education Norma Foley noted that since the CAG review was carried out in late 2018 and early 2019, "significant" progress had been made to better support and enhance the financial maturity of ETBs generally.
"In that regard an extensive programme of work that will further support financial management in the sector is being advanced, including the rollout of payroll shared services and consolidating financial management systems across all ETBs," she confirmed.
"I am pleased that the report identified many instances of good practice in the financial governance and reporting systems of the ETBs examined and that it acknowledges that these practices, when applied across the sector, will improve the financial and reporting practices of ETBs," she went on.
The 16 ETBs were established in July 2013 to replace 33 previous Vocational Educational Committees (VECs) in a bid to streamline first and second level education with further education and training.
They also absorbed responsibility from Solas for further education and training through 16 training centres.
