PAC Publishes Report on Third Level FinancesWednesday 12 July 2017 16.59
Public Accounts Committee critical of University’s handling of finances
This Public Accounts Committee today published a report of its examination of third level sector finances. The committee is seeking significant reform of oversight and accountability in the management of public funds by third level institutes.
Between 2014 and 2015 more than €3 billion of public money was used to fund Ireland’s third-level institutions, the bulk of which was through recurrent grants. In 2015/2016 more than 220,000 students attended Ireland’s universities, institutes and colleges, an 11% increase over five years according to the Higher Education Authority.
Todays PAC report says the failure of third-level institutions to provide up-to-date accounts was "unacceptable" and recommended that accounts should be published within six months of the end of each financial year.
The Committee stated that NUI Galway and the National College of Art and Design’s lack of recent financial accounts was "a major failure of corporate governance" and "must be regularised immediately".
NCAD is yet to publish accounts for 2014, 2015 or 2016, while NUI Galway has not published any financial statements for 2015 or 2016.
The PAC is recommending that third-level institutions should submit a ‘value for money’ based business case to the Higher Education Authority, prior to making any significant acquisitions.
The report, which also addresses a number of governance, oversight and financial failures highlighted by the recent RTÉ Investigates-Universities Unchallenged programme, recommended that all third-level institutions should have an appointed person to accept protected disclosures.
Foundations and Trusts
The Committee also called for transparency and accountability in the management of private donations held by six institutions in charitable foundations and trusts. The committee recommended that full disclosure of the foundations and trusts’ financial accounts should be made.
NUI Galway’s charitable foundation held €57.6 million in assets in June 2014 but has not published any accounts since then.
NUI Galway President Dr James Browne refused to open up the Galway Foundation’s accounts to public scrutiny stating to the Committee that "the Comptroller and Attorney General has no role regarding the accounts of the foundation."
Having reviewed the protected disclosures made at the University of Limerick the report said the PAC was not satisfied with the protection the sector gave to whistleblowers.
"The Committee remains deeply concerned that the infrastructure in place in third-level colleges may not be sufficiently strong or established to support those who make protected disclosures. "
The Committee said that it was its view "that members of staff who terminate employment with a public body by means of a severance payment should not be later re-engaged on contract or by any other arrangement."
UCC / IMI
The Committee examined last year’s purchase of the private executive training provider, the Irish Management Institute, by University College Cork.
The committee noted that "the amount paid by UCC approximated to the IMI's debts at the time of purchase" and that "UCC was unable to satisfy the Committee that the purchase price represented good value for money".
The Committee stated that, "given the substantial amount of public funds allocated on an annual basis to the third-level education sector, all third-level institutions should develop and submit to the Higher Education Authority for its advance approval a value for money based business case in respect of proposals for significant outlays such as UCC’s acquisition of the Irish Management Institute."
It said it did not accept UCC’s position that the deal did not pose a risk to taxpayers.
"The Committee’s view, therefore is that the servicing and repayment of the bank borrowings for the €20 million purchase will come substantially from public funds."
"The Committee is concerned that relying on a rise in property values as a hedge against failure carries substantial risks as property values can fall as well as rise. In the event of the venture failing, the cost would come ultimately out of public funds," it said.
During meetings in June UCC officials said that the deal would be self financing and would not create a risk for the tax payer. The HEA said it accepted this.
Dublin Institute for Technology was criticised for losing more than €700,000 in subscription fees after the UK publisher Swets went bankrupt. RTÉ Investigates revealed that DIT had to pay a further €760,000 to a replacement supplier and that DIT had spent €29.5 million without going through the proper internal approval process.
Following these revelations the Committee recommended that the Higher Education Authority should review all procurement framework agreements and require due diligence exercises be carried out on suppliers during the time frame of the agreement.