The process of funding external training was riddled with reporting weaknesses, writes Colm Keena

A SECOND internal audit report from Fás has now been disclosed and again raises concerns about the authority's control of public money.

The training and employment authority saw its budget grow significantly during the economic boom. This year its budget is a massive €1 billion. A picture of a body straining to find ways to spend a growing budget emerges from the latest report.

Last July, elements of an internal audit report given to Fás director general Roddy Molloy in May 2006 were disclosed. That report was the fruit of a year-long inquiry into expenditures by the authority's corporate affairs division.

Among the many matters reviewed were a sudden leap in the amount paid to consultants for a recurring annual service, generous up-front payments of invoices and contractors seemingly knowing they were getting contracts prior to tendering for them.

At the heart of the report was an apparent failure to put in place sufficient oversight of how significant amounts of money were being spent.

The second internal audit report that has now been given to The Irish Times, under the Freedom of Information Act, concerns a different division of the authority, but raises exactly the same concerns.

The June 2007 "internal audit special exercise report" reviewed matters to do with the authority's strategic initiatives and alliances/services to business programme.

The programme involved the provision of funding to organisations which were to provide training to employees, an area that had been chosen by the Government as a strategic priority.

By way of background, the report details how, in 2005, the Government provided €35.6 million in additional funding to Fás for the expansion of in-company training: "While Fás would utilise a significant percentage of the funding allocation using its existing processes and resources, other avenues had to be sourced and used to achieve the required training volumes."

A board meeting in September 2005 approved the expenditure of €19 million on training that would be delivered by approved external contractors. In the event, only €6.7 million was spent in 2005/2006.

The 14 bodies that became involved included Dorset College, the Irish Small and Medium Enterprises Association, the National College of Ireland, the Irish Congress of Trade Unions, the Society of the Irish Motor Industry, and the Chambers of Commerce of Ireland.

The internal auditors were of the view that the expenditure approved by the board was for the 2005/2006 year, but the services to business division did not agree and said the approved expenditure was to occur during and after 2006.

In 2005/2006, Fás paid out €4.5 million by way of advances to the bodies taking part in the programme. Some of the money had to be repaid after it was found that the bodies concerned could not provide the level of training originally envisaged.

"It now appears that many of the submissions were unrealistic and that Fás was exposed to some risk in paying out such large advances," states the report.

One body had returned 59 per cent of the money advanced, at the time the report was being written.

Also, the auditors found there were significant weaknesses from a monitoring and financial reporting perspective. Normal invoicing practice was not followed. Some contractors were asked over the phone near the end of the month, how much they had spent that month.

"Expenditure estimation by Fás up to September 2006 compounded by a further breakdown of control in head office finance, due to resource difficulties, exposed Fás to considerable risk," states the report.

The recording of expenditure and advances was not satisfactory, it found, "based on a total absence of control in the verification of expenditure accuracy, accepting estimated values without invoices from the training organisations, and failure to reconcile, until a late stage, substantial advances".

These problems led to a process that was "out of control financially", the report states, while acknowledging the "immense pressures" that staff are put under when new programmes are being introduced.