The Department of Education has referred a series of complaints by a member of the governing body of University College Cork about the financial management of the university to the Higher Education Authority (HEA) for consideration.
A department statement said that many of the allegations made by Prof Des Clarke of financial mismanagement at UCC had been made before and it referred them to the HEA which in turn referred them to the UCC's governing body, which had found them to be groundless.
According to the statement, the HEA has "no reason to believe that the financial position [at UCC] presents any serious or immediate risk to the university or that there are any impropriety in the finances."
The statement comes as Prof Clarke issued a 13-page open later to UCC president Gerry Wrixon in which he makes a series of allegations about financial mismanagement including expressing concern over the university's level of indebtedness.
Prof Clarke said UCC reported to the HEA that its debts exceeded €100 million but claimed that some €16 million of that borrowed for the medical building is "funded" because the university expects in the future to earn money from fee-paying students.
According to Prof Clarke, some €60 million of the total debt is expected to be similarly funded by future earnings from fee-paying students and he warned that UCC was currently using a significant amount of its income to fund the interests on these debts.
"These debts will be passed on to the next generation and will seriously hinder developments because our future earnings are already committed to paying off debts incurred during your presidency," he wrote to Mr Wrixon on a letter posted on the UCC staff website.
Prof Clarke also expressed concerns about whether UCC was compliant with pension legislation, particularly for part-time staff, while he also expressed concern about whether the university had the funding to meet its pension fund obligations for staff.
"Given the current unprecedented debts of the university and the concerns about the pension fund, UCC is an academic Enron waiting to happen," cautioned Prof Clarke before calling for an investigation of the university's finances by an independent agency.
However, a UCC spokesman strongly rejected Prof Clarke's allegations regarding financial mismanagement and said that his allegations were "clearly based upon a misunderstanding of finance" and said that UCC's capital debt stood at €39 million.
The assets acquired in incurring this debt had greatly appreciated in value, said the UCC spokesman, adding that all universities operate within HEA guidelines on indebtedness and UCC's debt was within these guidelines.
UCC was also fully compliant with pension law requirements and while it had been the case that UCC was not compliant with the law early in 2004 just after the introduction of new pension legislation, that was no longer the case.
"New legislation in 2003 required employers to make pension provision for part-time staff. The public sector was unclear how to deal with this and the education sector set up a working group to examine it and UCC was in the same position as the rest of the education sector."
Among the other concerns raised by Prof Clarke was what he described as the "bullish" attitude of the university authorities, challenging any staff with a grievance to go to court rather than seeking to resolve the grievances through less expensive means.
This approach to resolving disputes had resulted in UCC incurring legal costs of €3.338 million between 2000 and 2005 and he alleged that as a result, UCC's insurance against the costs of litigation had been cancelled by its insurers.
The UCC spokesman strongly rejected any suggestions that the university was "bullish" in its approach to disputes and inviting legal action, but he did confirm that the university had cancelled its insurance against litigation in 2004 after assessing the cost implications.