Third-level sector risks penalties for audit and salary breaches

Colleges and universities will face significantly increased financial penalties from this autumn if they fail to produce audited accounts, ignore salary rules, or breach strict spin-off company laws.

Education Minister Richard Bruton also announced greater inspection powers just a week after the Public Accounts Committee report revealed serious concerns over how the facilities are spending €1.5bn in taxpayers’ money every year.

In its report published last week, the committee highlighted serious financial issues at seven colleges, ITs, and universities it examined on foot of whistleblower concerns.

Among other issues, the report found that salary payments and severance packages were far above the norm in some facilities and that spun-out companies owned by college staff were taking tens of millions of euro that should have benefited the State.

The report also found that some facilities were failing to publish audited accounts for up to 37 months and that tens of millions of euro is being held in unaudited charity and foundation wing accounts despite the facilities claiming to have little to no money available to improve student services.

The PAC report recommended that, among other moves, the Department of Education and Higher Education Authority should consider imposing strict financial penalties on colleges’ board of governors if the issues continued.

And, speaking to reporters at the launch of a new technological universities bill — which is expected to help improve the regional diversity of third-level institutes across the country — Mr Bruton said he is in agreement on the move.

“Under the existing regime we did impose financial penalties last year, up to 2% in the case of some colleges,” he said.

“The HEA is doing a review at the moment of the way it funds institutes, and this is an opportunity to go beyond the penalty system that’s now there.

“The existing system allows up to 10% penalties, so it’s extensive. But where the innovation will be is that at the moment a lot of those penalties are potentially linked to poor performance, whereas there will now be a much clearer link to specific governance payments.

“So a failure to present accounts on time, if the information is inadequate, there will be a much clearer set of things that must be done to avoid penalties.”

Asked if the changes will be in place before the budget, he added: “The review that’s been done by the HEA is due to be completed by this summer, and it will be completed before the budget. They will implement the various decisions over the following years, but they already have that 10% capacity that’s accepted.”

As reported in yesterday’s Irish Examiner,

Mr Bruton said the planned changes to improve college and university transparency will include new “inspector” powers allowing the Government to appoint an official to examine a facility if it is deemed necessary. Similar previous powers were never used because they required the backing of the High Court and agreement of the colleges’ board of governors.

Meanwhile, Mr Bruton and super junior minister Mary Mitchell O’Connor yesterday said the new technological universities bill will help ensure greater regional diversity for third-level institutes.


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