Extensive touring in the US, Australia and Ireland to mark the Abbey Theatre's centenary last year led to the hidden losses of almost €1 million that prompted the departures of Brian Jackson and Ben Barnes from its management team.
As details of the unexpected losses from the tours emerged last night, the Minister for the Arts, John O'Donoghue, issued an implicit warning to the Abbey to put its house in order.
He strongly suggested that the Government might bypass the Arts Council when allocating public funding to the theatre. There would be little scope for discretionary funding for the Abbey in this system, he said.
The losses emerged despite the establishment of a new finance and audit committee, which was set up in 2004 to report to the Abbey board, and which met more than once per month during the year.
The Minister said he would be bringing proposals to Government on the financing of the Abbey once an independent report on the current financial crisis had been completed.
Abbey Theatre chairwoman Eithne Healy welcomed the Minister's suggestion, but said there were arguments "for and against" such a structure.
"Sometimes things that happen to the Abbey in difficult times might lead to changes that would be beneficial," she said.
The Abbey appealed for discretionary funding in the past to protect its financial position, most recently late last year when it received a special "stabilisation grant" of €1 million from the Arts Council in the wake of the financial crisis that led it to seek 30 redundancies from its 90 staff.
The detection of the new losses all but wipes out the gain from that grant. While the round of national and international of tours began last June, the losses were not uncovered until last week.
The theatre's spokeswoman blamed the failure to uncover the losses on human error and systems errors in the Abbey's management.
"Our accounting and financial reporting systems let us down . . . Nobody noticed the loss because information was not being included," she said.
Asked why, she suggested that the theatre's internal systems were not working effectively "for current levels of activity and production".
A national tour of seven cities and towns last June and July of a production of the Playboy of the Western World by John Milington Synge continued for seven weeks with up to 20 people on the road. The same production visited six US cities in October.
In addition, a production of The Gigli Concert by Tom Murphy, which would have involved fewer staff, visited Brisbane and Sydney in September.
As the Abbey moved to select an "independent consultant" to investigate why the touring losses remained hidden for so long, Mr O'Donoghue said his department would be in a position to "directly monitor" the theatre's finances if it was funded directly by the Government.
Such a system would mean that the Arts Council would lose its role in deciding on funding for the Abbey.
Mr O'Donoghue said the Abbey "hadn't been treated very well" in the past, but said that was not the case in recent years. While direct Government funding would provide certainty to the Abbey, the disadvantage of this approach would be that the public funding would be fixed.
Mr O'Donoghue said the Arts Council was also able to "look at the Abbey in a state of flux" and decide on an allocation based on a range of factors, throughout the year. "There are arguments on either side of the coin," he said.
Mr O'Donoghue said his proposals on the financing of the Abbey will form part of a wider package relating to the theatre's governance in general, which he characterised as "Victorian" in style.